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North-North FDI, exporting and the first mover advantage

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  • Andrzej Cieslik

    (University of Warsaw, Faculty of Economic Sciences, Department of Macroeconomics and International Trade Theory)

Abstract

In this paper we study the role of the first mover advantage in the choice between exporting and FDI among developed countries. We identify the conditions necessary for exporting and FDI, depending on trade costs and the cost of foreign investment. We demonstrate that four possible types of equilibria: a monopoly FDI equilibrium, a monopoly exporting equilibrium, a leader-follower duopoly FDI equilibrium, and a leader-follower duopoly exporting equilibrium, may emerge in the short-run depending on various combinations of the key parameters of the model.

Suggested Citation

  • Andrzej Cieslik, 2015. "North-North FDI, exporting and the first mover advantage," Bank i Kredyt, Narodowy Bank Polski, vol. 46(2), pages 109-128.
    • Handle: RePEc:nbp:nbpbik:v:46:y:2015:i:2:p:109-128
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    References listed on IDEAS

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    Cited by:

    1. Andrzej Cieslik, 2016. "Exports Versus Fdi In Smith-Motta Framework," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 11(2), pages 189-218, June.
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    3. Andrzej Cieślik, 2017. "Determinants of MNE Activity in Poland: The Case of Firms from EU-15," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 5(1), pages 151-167.
    4. Andrzej Cieślik, 2020. "Determinants of foreign direct investment from OECD countries in Poland," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 10(1), pages 9-25, March.

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    More about this item

    Keywords

    exporting; foreign direct investment; leader-follower model; proximity-concentration tradeoff;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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