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Title:Multinational firms: Easy come, easy go? PDF Logo
Authors:Haaland, Jan Ingvald Meidell
Wooton, Ian
Issue Date:2001
Series/Report no.:CeGE Discussion Paper 11
Abstract:Although many countries welcome inward investments by multinational firms (MNEs), it is often perceived that MNEs readily close down production in bad times. We study the choice of an MNE in deciding whether to establish a branch plant within a region, explicitly taking into account exit, as well as entry, costs. Protecting workers by having strict lay-off rules deters potential investment while subsidies attract it. We examine the policy trade-off for a host government and investigate how uncertainty affects the attractiveness of investment in a particular location. Just how much does the ease of exit influence the entry decision?
Subjects:multinational firms
subsidies
entry
exit
uncertainty
JEL:D92
F12
F23
Document Type:Working Paper
Appears in Collections:cege-Diskussionspapiere, Universität Göttingen

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