Location choice, competition, and welfare in non-tradable service FDI
AbstractWe investigate whether non-tradable service FDI is efficient from a welfare point of view. A fixed number of firms strategically decide which markets to locate in and then compete in quasi-Cournot fashion. Considering firm location in two symmetric markets, non-tradable service FDI may or may not be efficient for the source country, depending on the total number of firms, competition in markets and the curvature of the demand function. In contrast, non-tradable service FDI is always efficient for the host country and the overall economy. This implies that any policy that affects firm location between two symmetric markets will not be beneficial from a welfare viewpoint.
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Bibliographic InfoArticle provided by Elsevier in its journal International Review of Economics & Finance.
Volume (Year): 18 (2009)
Issue (Month): 1 (January)
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Web page: http://www.elsevier.com/locate/inca/620165
Non-tradable service FDI Location choice Quasi-Cournot behavior;
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