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Foreign direct investment, intra-firm trade and ownership structure

  • Konrad, Kai A.
  • Erik Lommerud, Kjell

Asymmetric information about true opportunity cost in trade between a multinational and its foreign affiliate can alleviate the hold-up problem in foreign direct investment. Selling shares in the affiliate to locals is also beneficial because it increase the parent multinational's information rent that is protected from a host government's confiscatory taxation.

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Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 45 (2001)
Issue (Month): 3 (March)
Pages: 475-494

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Handle: RePEc:eee:eecrev:v:45:y:2001:i:3:p:475-494
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