I am currently working on a master thesis and as a part of my analysis on tax planning I want a good economic model that shows how tax differences between foreign owned firms and local firms effects their business. The underlying assumption when drawing such a model is that foreign owned multinationals has a lower tax burden than local firms without any subsidiaries in other countries. This is what the data has shown so far and I would like to model what the result of this finding is using economic theory.
Do you have any suggestions of a model that captures both the loss of business a high tax firm and the gain in business for a low tax firm that competes in the same market with firms who pay more than them in taxes? Preferably one that can be graphed somehow as well.