Commercial Policy and Foreign Ownership
AbstractTo serve the domestic market, foreign multinationals often not only export there but also control local firms through FDI. This paper examines the effects of trade and industrial policies on prices, outputs, profits, and welfare when exports and FDI coexist. Specifically, we focus on the case in which a foreign firm has full control of a local firm through partial ownership. Cross-border ownership on the basis of both financial interests and corporate control leads to horizontal market-linkages through which tariffs and production subsidies may harm a locally-owned firm but benefit a foreign firm. Foreign ownership regulation benefits a locally-owned firm.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Review of International Economics.
Volume (Year): 19 (2011)
Issue (Month): 2 (05)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576
Other versions of this item:
- Jota Ishikawa & Yoichi Sugita & Laixun Zhao, 2008. "Commercial Policy and Foreign Ownership," Global COE Hi-Stat Discussion Paper Series gd08-005, Institute of Economic Research, Hitotsubashi University.
- Ishikawa, Jota & Sugita, Yoichi & Zhao, Laixun, 2008. "Commercial Policy and Foreign Ownership," CCES Discussion Paper Series 2, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
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