Playing away to win at home
This 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 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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- Head, K. & Mayer, T. & Ries, J., 2001.
"Revisiting Oligopolistic Reaction: Are FDI Decisions Strategic Complements,"
Papiers d'Economie MathÃ©matique et Applications
2001.49, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
- Head, Keith & Mayer, Thierry & Ries, John, 2002. "Revisiting Oligopolistic Reaction: Are FDI Decisions Strategic Complements?," CEPR Discussion Papers 3327, C.E.P.R. Discussion Papers.
- Head, K. & Mayer, T. & Ries, J., 2000. "Revisiting Oligopolistic Reaction : Are FDI Decisions Strategic Complements?," Papiers d'Economie MathÃ©matique et Applications 2000.49, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
- Keith Head & Thierry Mayer & John Ries, 2002. "Revisiting Oligopolistic Reaction : Are FDI Decisions Strategic Complements," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00267447, HAL.
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