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Entry Strategies, Welfare Analysis and Firms’ Behaviors

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Author Info
Wang Xun
Luo Ting
Abstract

Before serving a new market, a multinational enterprise (MNE) has several entry strategies, which include foreign direct investment (FDI), joint venture (JV) and exclusive licensing (EL). Entry cost, market size of the host country, and the discount rate are the main determinants when the MNE chooses its optimal entry strategy. At a certain level of ownership share that the MNE holds, JV will generate the highest social welfare. If firms can choose between competition and collusion, at different levels of the discount rate under FDI and EL, collusive and cheating behavior will happen.

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File URL: http://www.degit.ifw-kiel.de/papers/degit_12/C012_046.pdf
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Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c012_046.

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Length: 26 pages
Date of creation: Jun 2007
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Handle: RePEc:deg:conpap:c012_046

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Related research
Keywords: Entry strategies; Multinational enterprise; Welfare; Collusion; Cheating;

Find related papers by JEL classification:
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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