The first chapter examines the possibility that, in bilateral FTA environment between two FDI host countries, using tax policies on inward FDI, the two host governments effectively control trade flows between the two host markets and achieve maximum welfares. Developing a partial equilibrium model with two-stage sequential game framework, I found that a degree of heterogeneity of the host countries in terms of market demand size and marginal production cost affect, significantly, on the choices of the welfare maximizing strategic trade policies of the two host governments. At each of the welfare maximizing strategic trade policies, optimal tax policies are derived.

The second chapter, unlikely many other literatures, examines a tax policy competition between two rival countries in the presence of intra-industry FDI. In two-stage sequential game framework, using backward induction, the two rival multinational firms' profit maximizing choices and the two rival FDI host governments' welfare maximizing tax policies are derived. The effects of changes in each country's market demand size, marginal cost, tariff policies and transportation cost to the optimal tax policies are analyzed.

The last chapter examines how the FDI source country and the FDI host country determine optimal tax policies and maximize economic welfares in the presence of technology spill-over from a source country based overseas firm to a local firm in the host country. A role of technology spill-over in profit maximizing choices of firms and welfare maximizing tax policies of the two governments is extensively analyzed. It is found that the optimal tax policy of the FDI source country has no relevance to the tax and trade policies of the FDI host country and the presence of technology spill-over.