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Multinational Learning under Asymmetric Information

Author Info

Listed author(s):
  • Neelam Jain

    ()

    (Jesse H. Jones Graduate School of Management, Rice University)

  • Leonard J. Mirman

    (Department of Economics, University of Virginia)

Abstract

The aim of this paper is to analyze the competition between a multinational and the incumbent firm in a foreign market under asymmetric information about demand and unobservable outputs. It is shown that the incumbent firm increases its production in the first period to signal to the multinational that the demand is low. The multinational reduces its output in the foreign market in order to signal-jam. In addition, the multinational increases its production in the other market. However, total production of the multinational is lower. Implications for research and development expenditure by the multinational are examined.

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Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 67 (2001)
Issue (Month): 3 (January)
Pages: 637-655

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Handle: RePEc:sej:ancoec:v:67:3:y:2001:p:637-655
Contact details of provider: Web page: http://www.southerneconomic.org/

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Cited by:

  1. Karam, Fida & Daher, Wassim, 2013. "Insider trading in a two-tier real market structure model," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(1), pages 44-52.
  2. Lorenzo Esposito, 2014. "Con Annibale alle porte. L'internazionalizzazione del sistema bancario e il caso italiano," Moneta e Credito, Economia civile, vol. 67(266), pages 311-338.

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