Technology transfers and optimal entry strategies for the multinational firm
AbstractThis paper develops an oligopolistic model in which firms can choose between three different modes of entry to address three broad questions: (1) What is the role of trade costs and start-up costs in the entry decision if cross-border acquisitions involve no technology transfers? (2) How does the level of harmonization of technologies between the multinational and the acquired firm change the optimal mode of entry? (3) What is the role of market concentration on the entry decision given positive levels of technology transfers to the acquired firm? We show that in the case of cross-border acquisitions higher tariffs may act as an entry barrier by raising the reservation price of the acquisition target. Our analysis also underlines the importance of the usefulness of transferred technology. Acquisitions become more likely as the degree of harmonization between the multinational's and acquired firm's assets increases. Finally, we demonstrate that market concentration plays a non-trivial role in the entry decision when the technology transfers are not complete or as useful on the multinational.
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.
Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal The Journal of International Trade & Economic Development.
Volume (Year): 18 (2009)
Issue (Month): 4 ()
Contact details of provider:
Web page: http://www.tandfonline.com/RJTE20
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Marlene Grande & Aurora A. C. Teixeira, 2011. "Linking entry mode choices of MNCs with countries’ corruption. A review," OBEGEF Working Papers 008, OBEGEF - Observatório de Economia e Gestão de Fraude & OBEGEF Working Papers on Fraud and Corruption.
- repec:pra:mprapa:12989 is not listed on IDEAS
- Tekin-Koru, Ayca, 2009.
"Asymmetric effects of trade costs on entry modes: Firm level evidence,"
21483, University Library of Munich, Germany.
- Tekin-Koru, Ayça, 2012. "Asymmetric effects of trade costs on entry modes: Firm level evidence," European Economic Review, Elsevier, vol. 56(2), pages 277-294.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.