Entry Strategies, Welfare Analysis and Firms’ Behaviors
AbstractBefore 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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Bibliographic InfoPaper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c012_046.
Length: 26 pages
Date of creation: Jun 2007
Date of revision:
Entry strategies; Multinational enterprise; Welfare; Collusion; Cheating;
Find related papers by JEL classification:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-08-27 (All new papers)
- NEP-BEC-2007-08-27 (Business Economics)
- NEP-COM-2007-08-27 (Industrial Competition)
- NEP-CSE-2007-08-27 (Economics of Strategic Management)
- NEP-MIC-2007-08-27 (Microeconomics)
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