Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104080
Authors: 
Müller, Thomas
Year of Publication: 
2001
Series/Report no.: 
Munich Discussion Paper 2001-1
Abstract: 
This paper studies the entry decision of a multinational enterprise into a foreign market. Two alternative entry modes for a foreign direct investment are considered: Greenfield investment versus acquisition. In contrast to existing approaches, the acquisition price and the profits under both entry modes are endogenously determined. Interestingly, we find that the optimal entry mode decision is a ected by the competition intensity in the market in a non-monotonic way. When markets are very much or very little competitive, greenfield investment is the optimal entry mode, while for intermediate values it is acquisition.
Subjects: 
Foreign direct investment
multinational enterprise
greenfield investment
acquisition
transition economies
JEL: 
D43
F21
F23
L13
P31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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