The impact of multinational entry on domestic market structure and investment
AbstractWe model the impact of different modes of multinational entry on the choices of domestic firms. Focusing on the competitive effects of foreign entry for the host country we demonstrate that greenfield investment will increase competition only if it is not countered by anti-competitive reactions on the part of the domestic firms. Together with cross-border mergers and acquisitions the model, thus, provides two alternative explanations for the increase in concentration ratios in industries with mostly horizontal foreign direct investment. Moreover, foreign presence is shown to raise total investment in the local industry at the cost of crowding out domestic investment.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal International Review of Economics & Finance.
Volume (Year): 18 (2009)
Issue (Month): 1 (January)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/620165
Mode of foreign entry Host-country effects Competition Market structure Cost-reducing investment;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bjorvatn, Kjetil, 2004. "Economic integration and the profitability of cross-border mergers and acquisitions," European Economic Review, Elsevier, vol. 48(6), pages 1211-1226, December.
- Koen De Backer & Leo Sleuwaegen, 2002.
"Does foreign direct investment crowd out domestic entrepreneurship?,"
Vlerick Leuven Gent Management School Working Paper Series
2002-14, Vlerick Leuven Gent Management School.
- Koen De Backer & Leo Sleuwaegen, 2003. "Does Foreign Direct Investment Crowd Out Domestic Entrepreneurship?," Review of Industrial Organization, Springer, vol. 22(1), pages 67-84, February.
- Magnus Blomstrom & Jian-Ye Wang, 1992.
"Foreign Investment and Technology Transfer: A Simple Model,"
NBER Working Papers
2958, National Bureau of Economic Research, Inc.
- Wang, Jian-Ye & Blomstrom, Magnus, 1992. "Foreign investment and technology transfer : A simple model," European Economic Review, Elsevier, vol. 36(1), pages 137-155, January.
- Neary, J. Peter, 2004.
"Cross-Border Mergers as Instruments of Comparative Advantage,"
Center for European, Governance and Economic Development Research Discussion Papers
34, University of Goettingen, Department of Economics.
- J. Peter Neary, 2007. "Cross-Border Mergers as Instruments of Comparative Advantage," Review of Economic Studies, Oxford University Press, vol. 74(4), pages 1229-1257.
- J Peter Neary, 2004. "Cross-Border Mergers as Instruments of Comparative Advantage," Working Papers 200404, School Of Economics, University College Dublin.
- Neary, J Peter, 2004. "Cross-Border Mergers as Instruments of Comparative Advantage," CEPR Discussion Papers 4325, C.E.P.R. Discussion Papers.
- Peter J Buckley & Mark C Casson, 1998. "Analyzing Foreign Market Entry Strategies: Extending the Internalization Approach," Journal of International Business Studies, Palgrave Macmillan, vol. 29(3), pages 539-561, September.
- Eicher, Theo & Kang, Jong Woo, 2005.
"Trade, foreign direct investment or acquisition: Optimal entry modes for multinationals,"
Journal of Development Economics,
Elsevier, vol. 77(1), pages 207-228, June.
- Theo Eicher & Jong Woo Kang, 2004. "Trade, Foreign Direct Investment or Acquisition: Optimal Entry Modes for Multinationals," CESifo Working Paper Series 1174, CESifo Group Munich.
- Glass, Amy Jocelyn & Saggi, Kamal, 2002.
" Multinational Firms and Technology Transfer,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 104(4), pages 495-513, December.
- Salant, Stephen W & Switzer, Sheldon & Reynolds, Robert J, 1983. "Losses from Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 185-99, May.
- Driffield, Nigel, 2001. "The Impact of Domestic Productivity of Inward Investment in the UK," Manchester School, University of Manchester, vol. 69(1), pages 103-19, January.
- Horn, Henrik & Persson, Lars, 1999.
"The Equilibrium Ownership of an International Oligopoly,"
Working Paper Series
515, Research Institute of Industrial Economics.
- Horn, Henrik & Persson, Lars, 2001. "The equilibrium ownership of an international oligopoly," Journal of International Economics, Elsevier, vol. 53(2), pages 307-333, April.
- Horn, Henrik & Persson, Lars, 1999. "The Equilibrium Ownership of an International Oligopoly," CEPR Discussion Papers 2302, C.E.P.R. Discussion Papers.
- Jan Boone, 2000.
"Competitive Pressure: The Effects on Investments in Product and Process Innovation,"
RAND Journal of Economics,
The RAND Corporation, vol. 31(3), pages 549-569, Autumn.
- Boone, J., 2000. "Competitive pressure: The effects on investments in product and process innovation," Open Access publications from Tilburg University urn:nbn:nl:ui:12-84400, Tilburg University.
- Horstmann, Ignatius J. & Markusen, James R., 1992. "Endogenous market structures in international trade (natura facit saltum)," Journal of International Economics, Elsevier, vol. 32(1-2), pages 109-129, February.
- James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
- Nocke, Volker & Yeaple, Stephen, 2007. "Cross-border mergers and acquisitions vs. greenfield foreign direct investment: The role of firm heterogeneity," Journal of International Economics, Elsevier, vol. 72(2), pages 336-365, July.
- Ann E. Harrison & Brian J. Aitken, 1999. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," American Economic Review, American Economic Association, vol. 89(3), pages 605-618, June.
- Beladi, Hamid & Chakrabarti, Avik & Marjit, Sugata, 2009.
"Sequential Spatial Competition in Vertically Related industries with Different Product Varieties,"
19278, University Library of Munich, Germany.
- Beladi, Hamid & Chakrabarti, Avik & Marjit, Sugata, 2010. "Sequential spatial competition in vertically related industries with different product varieties," Economics Letters, Elsevier, vol. 106(2), pages 112-114, February.
- Rosa Forte & Paula Sarmento, 2012. "Foreign Presence and Market Concentration: The Case of Portuguese Manufacturing Industries," FEP Working Papers 444, Universidade do Porto, Faculdade de Economia do Porto.
- Beladi, Hamid & Chakrabarti, Avik & Marjit, Sugata, 2010.
"Cross-border merger, vertical structure, and spatial competition,"
Elsevier, vol. 109(2), pages 112-114, November.
- Beladi, Hamid & Chakrabarti, Avik & Marjit, Sugata, 2010. "Cross-border Merger, Vertical Structure, and Spatial Competition," MPRA Paper 24474, University Library of Munich, Germany.
- James Markusen & Frank Stähler, 2011.
"Endogenous market structure and foreign market entry,"
Review of World Economics (Weltwirtschaftliches Archiv),
Springer, vol. 147(2), pages 195-215, June.
- James R. Markusen & Frank Stähler, 2009. "Endogenous Market Structure and Foreign Market Entry," NBER Working Papers 15530, National Bureau of Economic Research, Inc.
- Markusen, James R. & Stähler, Frank, 2009. "Endogenous Market Structure and Foreign Market Entry," CEPR Discussion Papers 7567, C.E.P.R. Discussion Papers.
- Onur Koska, 2009. "A Model of Competition Between Multinational Firms," Working Papers 0911, University of Otago, Department of Economics, revised Oct 2009.
- Qu, Zhe & Huang, Can & Zhang, Mingqian & Zhao, Yanyun, 2013. "R&D offshoring, technology learning and R&D efforts of host country firms in emerging economies," Research Policy, Elsevier, vol. 42(2), pages 502-516.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wendy Shamier).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.