Acquisition versus Green eld Investment versus Export in an International Oligopoly with Heterogeneous Firms
AbstractForeign-owned firms exhibit widely-documented productivity advantages over domestic firms. Building on this stylized fact, we model the relationships between FDI flows and productivity differences across firms within an international oligopoly. Industrial structure is determined endogenously, and both greenfield and acquisition-FDI are allowed for. The technology gap between firms interacts with localized spillovers to determine greenfield-FDI incentives and with within-firm technology transfer to determine the profitability of acquisition-FDI. Greenfield and acquisition-FDI also affect the profitability of entry into the industry differently. We contrast our results with the insights of Dunning’s well-known OLI framework on the causes of FDI flows.
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Bibliographic InfoPaper provided by Department of Economics, Loughborough University in its series Discussion Paper Series with number 2012_03.
Date of creation: Apr 2012
Date of revision: Apr 2012
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acquisition-FDI; greenfield-FDI; technology transfer; spillovers; foreign-owned firms’ productivity advantages;
Find related papers by JEL classification:
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
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