This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Exploring New Markets: Direct Investment, Contractual Relations and the Multinational Enterprise

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Horstmann, Ignatius J
Markusen, James R

Additional information is available for the following registered author(s):

Abstract

The authors consider the multinational firm's decision on whether to enter a new market immediately via direct investment or to contract initially with a local agent and (possibly) invest later. Use of a local agent allows the multinational to avoid costly mistakes by finding out if the market is large enough to support direct investment. However, the agent is able to extract information rents from the multinational due to being better informed about market characteristics. The authors find that direct investment is the desirable mode of entry when the market is on average large and the variability in profits is not. Copyright 1996 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Download Info
To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Publisher Info
Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 37 (1996)
Issue (Month): 1 (February)
Pages: 1-19
Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Handle: RePEc:ier:iecrev:v:37:y:1996:i:1:p:1-19

Contact details of provider:
Postal: 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297
Phone: (215) 898-8487
Fax: (215) 573-2057
Email:
Web page: http://www.ssc.upenn.edu/econ/iereview/
More information through EDIRC

Order Information:
Email:
Web: http://www.blackwellpublishing.com/subs.asp?ref=0020-6598

For technical questions regarding this item, or to correct its listing, contact: ().

Related research
Keywords:

Other versions of this item:

References listed on IDEAS
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.:
  1. Aghion, Philippe & Bolton, Patrick, 1987. "Contracts as a Barrier to Entry," American Economic Review, American Economic Association, vol. 77(3), pages 388-401, June.
  2. Ethier, Wilfred J, 1986. "The Multinational Firm," The Quarterly Journal of Economics, MIT Press, vol. 101(4), pages 805-33, November. [Downloadable!] (restricted)
  3. Ignatius Horstmann & James R. Markusen, 1987. "Licensing versus Direct Investment: A Model of Internalization by the Multinational Enterprise," Canadian Journal of Economics, Canadian Economics Association, vol. 20(3), pages 464-81, August. [Downloadable!] (restricted)
  4. Ethier, Wilfred J. & Markusen, James R., 1996. "Multinational firms, technology diffusion and trade," Journal of International Economics, Elsevier, vol. 41(1-2), pages 1-28, August. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, 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.)

  1. Mihir A. Desai & James R. Hines, Jr., 1996. ""Basket" Cases: International Joint Ventures After the Tax Reform Act of 1986," NBER Working Papers 5755, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Rafael Rob & Nikolaos Vettas, 2001. "Foreign Direct Investment and Exports with Growing Demand," Penn CARESS Working Papers f8c083d9257897f97ff49d054, UCLA Department of Economics. [Downloadable!]
  3. Rafael Rob & Nikolaos Vettas, 2003. "Foreign Direct Investment and Exports with Growing Demand," PIER Working Paper Archive 03-001, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania. [Downloadable!]
  4. Mikhail Klimenko & Kamal Saggi, 2004. "Technical Compatibility and the Mode of Foreign Entry under Network Externalities," Working Papers 04-05, NET Institute, revised Oct 2004. [Downloadable!]
  5. Rob, Rafael & Vettas, Nikolaos, 2001. "Foreign Direct Investment and Exports with Growing Demand," CEPR Discussion Papers 2786, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  6. Choi, Jay Pil, 1996. "Technology Transfer with Moral Hazard," Economics Series 22, Institute for Advanced Studies. [Downloadable!]
    Other versions:
  7. James E. Anderson, 1999. "Why Do Nations Trade (So Little)?," Boston College Working Papers in Economics 428, Boston College Department of Economics. [Downloadable!]
  8. Rafael, MONER-COLONQUES & Vicente, ORTS & José J., SEMPERE-MONERRIS, 2003. "The Strategic Role of Information Asymmetry on Demand for the Multinational Enterprise," Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper 2003002, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  9. Nigel Driffield & Karl Taylor, . "Are Foreign Firms More Technologically Intensive? UK Establishment Evidence From the ARD," Discussion Papers in Public Sector Economics 01/9, Department of Economics, University of Leicester. [Downloadable!]
    Other versions:
  10. James E. Rauch & Joel Watson, 1999. "Starting Small in an Unfamiliar Environment," NBER Working Papers 7053, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  11. Andrea Fosfuri & Massimo Motta & Thomas Ronde, 1998. "Foreign Direct Investments and Spillovers through Workers' Mobility," Economics Working Papers 258, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
    Other versions:
  12. Barbara G. Katz & Joel Owen, 2003. "Should Governments Compete for Foreign Direct Investment?," Working Papers 03-07, New York University, Leonard N. Stern School of Business, Department of Economics. [Downloadable!]
    Other versions:
  13. Amy Glass & Kamal Saggi, 1999. "The Dynamic Impact of Internalization Advantage," Working Papers 99-04, Ohio State University, Department of Economics. [Downloadable!]
Statistics
Access and download statistics

Did you know? Each page is provided with a technical contact, in case something is not right with the supplied information. See under "publisher info".

This page was last updated on 2008-8-28.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.