Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92794
Authors: 
Creane, Anthony
Miyagiwa, Kaz
Year of Publication: 
2007
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 691
Abstract: 
We examine the role of cost uncertainty in a firm's choice between exporting and foreign investment in oligopolistic industry. We consider both foreign direct investment and an international joint venture, and allow country-specific and firm-specific cost uncertainty. Unlike exporting, either form of foreign investment exposes home and foreign firms to common country-specific cost shocks, implying a better knowledge of each other's country-specific shocks. Further, a joint venture allows the firms to learn each other's firm-specific cost. A firm's plant location decision depends on the interaction of these two effects, which depend on the type of competition and the substitutability of the firm's products.
Subjects: 
Country-specific cost uncertainty
learning
Foreign investment
FDI
Joint ventures
JEL: 
D83
F12
Document Type: 
Working Paper

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