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Georg-August-Universität Göttingen >
cege - Centrum für Europa-, Governance- und Entwicklungsforschung, Universität Göttingen >
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http://hdl.handle.net/10419/31996
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| Title: | | Market entry and foreign direct investment  |
| Authors: | | Stähler, Frank |
| Issue Date: | | 2004 |
| Series/Report no.: | | CeGE Discussion Paper 22 |
| Abstract: | | This paper discusses the impact of foreign direct investment (FDI) on market entry and welfare in a model of two countries and two periods. In the first period, firms enter the market as national firms, in the second period, FDI is possible. The paper demonstrates that FDI reduces market entry because equilibrium profits in the second period decline with a decrease in the fixed cost of FDI. Therefore, compared to a trade regime without any FDI, prices rise in the first period but decline in the second period. The paper shows, however, that FDI will unambiguously improve the sum of discounted consumer surplus. |
| Subjects: | | Foreign direct investment multinational enterprises imperfect competition free entry |
| JEL: | | F12 F15 |
| Document Type: | | Working Paper |
| Appears in Collections: | | cege-Diskussionspapiere, Universität Göttingen
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