Price Undertakings, VERs, and Foreign Direct Investment
We compare the relative effect of a voluntary export restraint (VER) and a price undertaking on foreign firms' incentive to engage in FDI. We emphasize foreign rivalry as a determinant of FDI. We show, in a model that has two foreign firms competing with a home firm in the home country, that a price undertaking induces more FDI than a VER. The home country government, operating under the constraint to protect the home firm, is generally better off settling an antidumping case with a VER than with a price undertaking.
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- Thomas J. Prusa, 2001.
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- Bruce A. Blonigen & KaSaundra Tomlin & Wesley W. Wilson, 2002.
"Tariff-jumping FDI and Domestic Firms’ Profits,"
University of Oregon Economics Department Working Papers
2003-23, University of Oregon Economics Department, revised 01 Jun 2002.
- Bruce A. Blonigen & KaSaundra Tomlin & Wesley W. Wilson, 2002. "Tariff-jumping FDI and Domestic Firms' Profits," NBER Working Papers 9027, National Bureau of Economic Research, Inc.
- Bruce A. Blonigen & KaSaundra Tomlin & Wesley W. Wilson, 2001. "Tariff-jumping FDI and Domestic Firms’ Profits," University of Oregon Economics Department Working Papers 2002-5, University of Oregon Economics Department, revised 01 Jun 2002.
- Motta, Massimo, 1992. "Multinational firms and the tariff-jumping argument : A game theoretic analysis with some unconventional conclusions," European Economic Review, Elsevier, vol. 36(8), pages 1557-1571, December.
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