Tariff Jumping and Joint Ventures
AbstractIt is well known that high tariffs tend to induce foreign direct investment (FDI) by encouraging the investors to jump the ‘‘tariff wall.’’ This paper examines the economic interaction among tariffs, FDI, and international joint ventures (IJV). We show that in the presence of a strong local competitor, even if opening a fully owned subsidiary is not profitable to a foreign firm, the foreign firm may still enter the host country market through IJV. However, IJV is not profitable for sufficiently high tariff rates. Hence, we argue that liberal trade policies may attract foreign investments through the formation of joint ventures.
Download InfoTo 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.
Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 75 (2009)
Issue (Month): 4 (April)
Find related papers by JEL classification:
- F1 - International Economics - - Trade
- L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- D2 - Microeconomics - - Production and Organizations
- P - Economic Systems
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Tai-Liang Chen & Yuanyuan Ma, 2010. "International joint venture, commitment and host-country policy in an integrated market," International Review of Economics, Springer, Springer, vol. 57(4), pages 411-421, December.
- Beladi, Hamid & Mukherjee, Arijit, 2012. "Footloose foreign firm and profitable domestic merger," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 83(2), pages 186-194.
- Basak, Debasmita & Mukherjee, Arijit, 2014. "Optimal contract under brand name collaboration," Economic Modelling, Elsevier, Elsevier, vol. 37(C), pages 238-240.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Laura Razzolini).
If references are entirely missing, you can add them using this form.