Playing away to win at home
AbstractThis paper presents a model of the interaction between two rival firms based in the same country. Each firm must decide how to serve a foreign market (export or foreign production) and how much to invest in a corporate-wide asset that reduces production costs and/or augments the willingness-to-pay for their product. In this scenario, the firms’ foreign direct investment decisions are interdependent. Furthermore, strategic motives for FDI relate not to a firm’s domestic, as well as foreign, market profits. One possibility is that a firm sets up overseas production even though its foreign market profits would be higher by exporting.
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Bibliographic InfoPaper provided by School Of Economics, University College Dublin in its series Working Papers with number 200626.
Length: 21 pages
Date of creation: 11 Dec 2006
Date of revision:
Foreign direct investment; Multinational firm; R&D; Oligopoly;
Other versions of this item:
- 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
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
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CEPR Discussion Papers
3327, C.E.P.R. Discussion Papers.
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