Why should countries or regions compete to attract firms? Why they should enter in a "subsidy tournament"or start building costly infrastructure to boost investment in their territory? More generally, is regional competition really welfare enhancing ? These questions are rampant in the popular press, especially in Europe where the emergence of the EuropeanMarket has drastically increased themobility of both production factors and final goods. These issues have been by addressed in the economic literature from three distinct starting points: strategic trade literature, literature on capital income tax competition and the new economic geography in which most of the models surveyed are rooted.