Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/191599
Authors: 
Morasch, Karl
Year of Publication: 
2018
Series/Report no.: 
Volkswirtschaftliche Diskussionsbeiträge 2018,5
Abstract: 
The decision over exports vs. foreign direct investment (FDI) is usually discussed in an extension of the so-called Melitz model where firms with heterogeneous costs compete in a monopolistically competitive industry. The present paper starts from a situation where a potential foreign entrant would be just indifferent between exports and FDI in such a setting. However, by assuming oligopolistic interaction, strategic considerations are also taken into account. It is shown how the strategic impact of lower marginal cost makes FDI more attractive in a Cournot setting while exports are preferable under price competition in a market with differentiated goods. Beyond that it is also explored how a strategic alliance with a local incumbent could be a superior alternative for market entry.
Subjects: 
Entry strategies
Trade
FDI
Alliances
Oligopoly
JEL: 
D43
L11
L41
Document Type: 
Working Paper
Social Media Mentions:

Files in This Item:
File
Size
610.13 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.