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http://hdl.handle.net/10419/56317
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| Title: | | Cross-border mergers and greenfield foreign direct investment  |
| Authors: | | Stepanok, Ignat |
| Issue Date: | | 2010 |
| Series/Report no.: | | SSE/EFI Working Paper Series in Economics and Finance 731 |
| Abstract: | | I present a model of international trade and foreign direct investment (FDI), where FDI is comprised of greenfield FDI and mergers and acquisitions (M&A). Working in a monopolistically competitive environment, merging firms do not reduce competition. Mergers are motivated by efficiency gains and transfer of technology and expertise. Following empirical evidence, I model greenfield investors as the more productive group relative to M&A firms. The model has two symmetric countries and generates two-way flows of both M&A and greenfield FDI. Greater proximity to a market makes more firms choose greenfield FDI over M&A when investing there. Empirical evidence supports this result. |
| Subjects: | | Foreign direct investment Mergers Greenfield Firm heterogeneity |
| JEL: | | F12 F23 O41 |
| Document Type: | | Working Paper |
| Appears in Collections: | | SSE/EFI Working Paper Series in Economics and Finance, EFI - The Economic Research Institute, Stockholm School of Economics
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