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Strategic Trade Policy and the Home Bias in Firm Ownership Structure

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  • Steffen Huck
  • Kai A. Konrad

Abstract

In this note we consider the preferences of a profit maximizing firm for international ownership in a world in which firms compete in an international Cournot oligopoly, and in which countries use strategic trade policy. We find that firms prefer national ownership and show that full indigenisation occurs in the equilibrium.

Suggested Citation

  • Steffen Huck & Kai A. Konrad, 2003. "Strategic Trade Policy and the Home Bias in Firm Ownership Structure," CESifo Working Paper Series 892, CESifo.
    • Handle: RePEc:ces:ceswps:_892
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    References listed on IDEAS

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    1. Gordon, Roger H & Bovenberg, A Lans, 1996. "Why Is Capital So Immobile Internationally? Possible Explanations and Implications for Capital Income Taxation," American Economic Review, American Economic Association, vol. 86(5), pages 1057-1075, December.
    2. Welzel, Peter, 1995. "Strategic Trade Policy with Internationally Owned Firms," Bulletin of Economic Research, Wiley Blackwell, vol. 47(3), pages 221-232, July.
    3. Dick, Andrew R., 1993. "Strategic trade policy and welfare : The empirical consequences of cross-ownership," Journal of International Economics, Elsevier, vol. 35(3-4), pages 227-249, November.
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    8. Tesar, Linda L. & Werner, Ingrid M., 1995. "Home bias and high turnover," Journal of International Money and Finance, Elsevier, vol. 14(4), pages 467-492, August.
    9. Feeney, JoAnne & Hillman, Arye L, 2001. "Privatization and the Political Economy of Strategic Trade Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(2), pages 535-556, May.
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    Cited by:

    1. Yoshitomo Ogawa & Yoshiyasu Ono, 2016. "The Welfare Effects of Attracting Foreign Direct Investment in the Presence of Unemployment," ISER Discussion Paper 0959, Institute of Social and Economic Research, Osaka University.
    2. Steffen Huck & Kai A. Konrad, 2003. "Strategic Trade Policy and Merger Profitability," CESifo Working Paper Series 948, CESifo.

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    More about this item

    Keywords

    strategic trade; international ownership; Cournot oligopoly; home bias;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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