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Investor State Dispute Settlement and Multinational Firm Behavior

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  • Schjelderup, Guttorm

    () (Dept. of Business and Management Science, Norwegian School of Economics)

  • Stähler, Frank

    () (School of Business and Economics, University of Tübingen)

Abstract

Investor-state dispute settlements (ISDS) were supposed to become an integral part of multilateral trade and investment agreements although the partner countries of these deals do not suffer from substantial institutional weakness. This paper shows why multinational firms lobby for ISDS also in this environment beyond the potential compensation an ISDS provision may offer. ISDS makes them more aggressive by increasing cost-reducing investment. Therefore, potential compensations to a foreign investor do not imply a zero-sum game, and competition with a domestic firm does not necessarily help but may imply even more excessive investment.

Suggested Citation

  • Schjelderup, Guttorm & Stähler, Frank, 2017. "Investor State Dispute Settlement and Multinational Firm Behavior," Discussion Papers 2017/4, Norwegian School of Economics, Department of Business and Management Science.
  • Handle: RePEc:hhs:nhhfms:2017_004
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    File URL: http://hdl.handle.net/11250/2437087
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    References listed on IDEAS

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    1. Horst Raff & Michael Ryan & Frank Stähler, 2012. "Firm Productivity and the Foreign‐Market Entry Decision," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(3), pages 849-871, September.
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    Cited by:

    1. Horn, Henrik, 2018. "Investor-State vs. State-State Dispute Settlement," Working Paper Series 1248, Research Institute of Industrial Economics, revised 20 Feb 2019.
    2. Haufler, Andreas & Mardan, Mohammed & Schindler, Dirk, 2018. "Double tax discrimination to attract FDI and fight profit shifting: The role of CFC rules," Journal of International Economics, Elsevier, vol. 114(C), pages 25-43.

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    More about this item

    Keywords

    Investor-State Dispute Settlement; Mulitnational Enterprises; Foreign Direct Investment; TTIP; TPP;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements

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