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Competition for Natural Resources and the Hold-Up Problem

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  • Carsten Hefeker
  • Sebastian Kessing

Abstract

We study the role of competition for the hold-up problem in foreign direct investment in resource-based industries. The host country government is not only unable to commit not to expropriate investment ex post, but is also unable to commit to the provision of local resources. In the case of competition for local resources this dual commitment problem triggers higher investment levels and increases host country revenues, but hurts pro.ts of international investors.

Suggested Citation

  • Carsten Hefeker & Sebastian Kessing, 2016. "Competition for Natural Resources and the Hold-Up Problem," CESifo Working Paper Series 6120, CESifo.
    • Handle: RePEc:ces:ceswps:_6120
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp6120.pdf
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    References listed on IDEAS

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    Cited by:

    1. Ramin Dadasov & Carsten Hefeker & Oliver Lorz, 2014. "Natural Resource Production, Corruption, and Expropriation," MAGKS Papers on Economics 201436, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    2. Ramin Dadasov & Carsten Hefeker & Oliver Lorz, 2017. "Natural resource extraction, corruption, and expropriation," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(4), pages 809-832, November.

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    More about this item

    Keywords

    foreign direct investment; natural resources; hold-up problem;
    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
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts

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