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Tariff Jumping and Joint Ventures

Author

Listed:
  • Hamid Beladi

    (University of Texas at San Antonio)

  • Sugata Marjit

    (Centre for Studies in Social Sciences, Calcutta, West Bengal India)

  • Avik Chakrabarti

    (University of Wisconsin-Milwaukee)

Abstract

It is well known that high tariffs tend to induce direct foreign investment (DFI) by encouraging the investors to jump the “tariff-wall”. We argue that in the presence of a “tough” local competitor DFI may not be possible but suitable designed joint-ventures (JV) between the local and the foreign firm would be feasible. However, very high tariffs would be detrimental to the formation of such joint ventures. Hence we argue that liberal trade policies may attract foreign investments through the formation of joint-ventures.

Suggested Citation

  • Hamid Beladi & Sugata Marjit & Avik Chakrabarti, 2006. "Tariff Jumping and Joint Ventures," Working Papers 0002, College of Business, University of Texas at San Antonio.
    • Handle: RePEc:tsa:wpaper:0006eco
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    More about this item

    Keywords

    General equilibrium; trade policy; direct foreign investment; joint ventures.;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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