Investment and depreciation tax shield under spatial competition: The case of the Greek hotel sector

Studies examining the effects of spatial competition spillovers on hospitality firms’ decision-making process have been steadily gaining traction. Using a sample of 508 Greek hotels and a Spatial Autoregressive Model (SAR), we examine the consequences of a change in tax depreciation provisions on investment. We find that a reduction in depreciation rates has a negative impact on hospitality firms’ investment decisions, with an additional, reverse effect arising from spillovers of this reduction’s effects on competitors.