Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/65728
Authors: 
Collie, David R.
Year of Publication: 
2010
Series/Report no.: 
Cardiff Economics Working Papers E2010/4
Abstract: 
A paradox in international trade is that multilateral trade liberalisation has resulted in increases in both the volume of world trade and the amount of foreign direct investment (FDI). This note presents a Cournot duopoly model with two regions, each consisting of two countries, and with an inter-regional transport cost. It is shown that multilateral trade liberalisation may lead firms to switch from exporting to undertaking export-platform FDI when the interregional transport cost is high. Also, when the inter-regional transport cost is high, the switch to FDI leads to an increase in the volume of world trade in this industry.
Subjects: 
Trade Liberalisation
Foreign Direct Investment
Cournot Oligopoly
JEL: 
F12
F13
F23
Document Type: 
Working Paper

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