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A Model of Competition Between Multinational Firms

Author

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  • Onur Koska

    (Department of Economics, University of Tuebingen)

Abstract

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.

Suggested Citation

  • Onur Koska, 2009. "A Model of Competition Between Multinational Firms," Working Papers 0911, University of Otago, Department of Economics, revised Oct 2009.
    • Handle: RePEc:otg:wpaper:0911
    as

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    File URL: http://www.otago.ac.nz/economics/research/otago077126.pdf
    File Function: First version, 2009
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Market Entry; Foreign Direct Investment; Acquisition; Trade;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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