Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/72408
Authors: 
Leahy, Dermot
Pavelin, Stephen
Year of Publication: 
2006
Series/Report no.: 
Working Paper Series, UCD Centre for Economic Research 06/26
Abstract: 
This paper presents a model of the interaction between two rival firms based in the same country. Each firm must decide how to serve a foreign market (export or foreign production) and how much to invest in a corporate-wide asset that reduces production costs and/or augments the willingness-to-pay for their product. In this scenario, the firms’ foreign direct investment decisions are interdependent. Furthermore, strategic motives for FDI relate not to a firm’s domestic, as well as foreign, market profits. One possibility is that a firm sets up overseas production even though its foreign market profits would be higher by exporting.
Subjects: 
Foreign direct investment
Multinational firm
R&D
Oligopoly
JEL: 
F23
L13
O30
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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