Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94845
Authors: 
Andersson, Thomas
Year of Publication: 
1990
Series/Report no.: 
IUI Working Paper 288
Abstract: 
This paper analyses the behaviour of competing governments in the EC with respect to inflows of direct investment. Solving a non-cooperative sequential bargaining game in which host countries gain from direct investment through tax revenue or imposition of forced local subcontracting, it is concluded that a successful 1992 program does not allow discrimination of direct investment. As they bid against each other for the attraction of projects, the EC countries will give away rents generated by protectionism. Hence, multinational firms may temper the emergence of trading 'blocs' through their ability to play individual countries against each other.
Subjects: 
Direct investment
Game theory
Multinational firms
JEL: 
C72
C78
F21
Document Type: 
Working Paper

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