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| Title: | | Analysing foreign market entry: the choice between greenfield investment and acquisitions  |
| Authors: | | Görg, Holger |
| Issue Date: | | 1998 |
| Series/Report no.: | | Trinity Economic Papers Series, Technical Paper / Trinity College 1998,1 |
| Abstract: | | This paper formalises the choice a firm has to face when entering a foreign market via FDI as between setting up an entirely new plant (greenfield investment) or acquiring an existing indigenous firm. Our results show that in an asymmetric duopoly situation a new entrant will normally be best off by acquiring an existing indigenous low-technology firm, thus, forming a duopoly with an indigenous high-technology firm. While in welfare terms the entry of the foreign firm damages the country in most cases, there exist some possibilities that welfare, particularly after a greenfield investment by the foreign firm, is higher than before entry, even when there is full profit repatriation. |
| JEL: | | F23 L13 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des IfW Economists Online
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