A Model of Competition Between Multinational Firms
This study focuses on the theory of how multinational firms choose their entry modes between alternative options (i.e., trade, greenfield investment, or acquisition). In a comprehensive model of strategic decision-making with more than one multinational firm, it delineates how a multinational firm's entry mode influences a rival multinational firm's market entry behavior and how exogenous factors (e.g., market size, firms' production cost, per-unit trade cost and fixed investment cost) affect the optimal entry modes. The main finding of the study is that competition among multinational firms substantially affects their optimal entry modes such that competition implies different entry modes compared to no competition.
|Date of creation:||Oct 2009|
|Date of revision:||Oct 2009|
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- Mukherjee, Arijit & Sengupta, Sarbajit, 2001. "Joint Ventures versus Fully Owned Subsidiaries: Multinational Strategies in Liberalizing Economies," Review of International Economics, Wiley Blackwell, vol. 9(1), pages 163-80, February.
- Neary, J Peter, 2006.
"Trade Costs and Foreign Direct Investment,"
CEPR Discussion Papers
5933, C.E.P.R. Discussion Papers.
- Pehr-Johan Norbäck & Lars Persson, 2008. "Globalization and profitability of cross-border mergers and acquisitions," Economic Theory, Springer, vol. 35(2), pages 241-266, May.
- Haller, Stefanie A., 2009. "The impact of multinational entry on domestic market structure and investment," International Review of Economics & Finance, Elsevier, vol. 18(1), pages 52-62, January.
- Norbäck, Pehr-Johan & Persson, Lars, 2001.
"Privatization and Foreign Competition,"
CEPR Discussion Papers
2735, C.E.P.R. Discussion Papers.
- Theo Eicher & Jong Woo Kang, 2004.
"Trade, Foreign Direct Investment or Acquisition: Optimal Entry Modes for Multinationals,"
CESifo Working Paper Series
1174, CESifo Group Munich.
- Eicher, Theo & Kang, Jong Woo, 2005. "Trade, foreign direct investment or acquisition: Optimal entry modes for multinationals," Journal of Development Economics, Elsevier, vol. 77(1), pages 207-228, June.
- Javorcik, Beata Smarzynska & Saggi, Kamal, 2004.
"Technological asymmetry among foreign investors and mode of entry,"
Policy Research Working Paper Series
3196, The World Bank.
- Beata S. Javorcik & Kamal Saggi, 2010. "Technological Asymmetry Among Foreign Investors And Mode Of Entry," Economic Inquiry, Western Economic Association International, vol. 48(2), pages 415-433, 04.
- Thomas Borek & Stefan Buehler & Armin Schmutzler, 2004. "Mergers under Asymmetric Information – Is there a Lemons Problem?," SOI - Working Papers 0408, Socioeconomic Institute - University of Zurich.
- Horn, Henrik & Persson, Lars, 1999.
"The Equilibrium Ownership of an International Oligopoly,"
Working Paper Series
515, Research Institute of Industrial Economics.
- Horn, Henrik & Persson, Lars, 2001. "The equilibrium ownership of an international oligopoly," Journal of International Economics, Elsevier, vol. 53(2), pages 307-333, April.
- Horn, Henrik & Persson, Lars, 1999. "The Equilibrium Ownership of an International Oligopoly," CEPR Discussion Papers 2302, C.E.P.R. Discussion Papers.
- Barros, Pedro Pita, 1998. "Endogenous mergers and size asymmetry of merger participants," Economics Letters, Elsevier, vol. 60(1), pages 113-119, July.
- James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
- Salant, Stephen W & Switzer, Sheldon & Reynolds, Robert J, 1983. "Losses from Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 185-99, May.
- Bjorvatn, Kjetil, 2004. "Economic integration and the profitability of cross-border mergers and acquisitions," European Economic Review, Elsevier, vol. 48(6), pages 1211-1226, December.
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