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FDI in post-production services and product market competition

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  • Ishikawa, Jota
  • Morita, Hodaka
  • Mukunoki, Hiroshi

Abstract

Post-production services, such as sales, distribution, and maintenance, comprise a crucial element of business activity. We explore an international duopoly model in which a foreign firm has the option of outsourcing post-production services to its domestic rival or providing those services by establishing its own facilities through FDI. We demonstrate that trade liberalization in goods may hurt domestic consumers and lower world welfare, and that the negative welfare impacts are turned into positive ones if service FDI is also liberalized. This finding yields important policy implications, given the reality that the progress of liberalization in service sectors is still limited.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 82 (2010)
Issue (Month): 1 (September)
Pages: 73-84

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Handle: RePEc:eee:inecon:v:82:y:2010:i:1:p:73-84

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Web page: http://www.elsevier.com/locate/inca/505552

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Keywords: Post-production services Trade liberalization FDI Outsourcing International oligopoly;

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References

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  1. Ishikawa, Jota & Morita, Hodaka & Mukunoki, Hiroshi, 2010. "FDI in Post-Production Services and Product Market Competition," CCES Discussion Paper Series 29, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
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Citations

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Cited by:
  1. Jota Ishikawa & Hodaka Morita & Hiroshi Mukunoki, 2010. "FDI in Post-Production Services and Product Market Competition," Global COE Hi-Stat Discussion Paper Series gd10-136, Institute of Economic Research, Hitotsubashi University.
  2. Dibyendu Maiti & Arijit Mukherjee, . "Governance, Foreign Direct Investment and Domestic Welfare," Discussion Papers 10/27, University of Nottingham, GEP.
  3. Arijit Mukherjee & Leonard F.S. Wang & Yingyi Tsai, . "Governance and foreign direct investment: is there a two-way relationship?," Discussion Papers 11/02, University of Nottingham, School of Economics.
  4. ISHIKAWA Jota & OKUBO Toshihiro, 2013. "Trade and Industrial Policy Subtleties with International Licensing," Discussion papers 13050, Research Institute of Economy, Trade and Industry (RIETI).
  5. TAKECHI Kazutaka, 2008. "International Strategic Alliances for Local Market Entry: Direct Launches versus Marketing Alliances in Pharmaceuticals," Discussion papers 08022, Research Institute of Economy, Trade and Industry (RIETI).

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