Market Size, Product Differentiation and Bidding for New Varieties

Ian Wooton () and Jie Ma

No 11943, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We analyse a firm's investment decision in a regional economy composed of two countries. The firm already manufactures a horizontally differentiated good in the region and we determine the firm's equilibrium location choice for the new good and the welfare consequences of fiscal competition between the two countries. The outcome is the result of interactions among market-size, product-differentiation, and import-substitution effects. The first two effects represent the fundamental trade-off facing the firm. The third effect provides each country with an economic incentive to compete for the FDI. Past papers have addressed the market-size and import-substitution effects but, as far as we know, the product-differentiation effect is new to the literature.

Keywords: Fdi; Import substitution; Market size; Mnes; Product differentiation (search for similar items in EconPapers)
JEL-codes: F21 F23 L22 (search for similar items in EconPapers)
Date: 2017-03
New Economics Papers: this item is included in nep-bec, nep-ind and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP11943 (application/pdf)

Related works:
Journal Article: Market size, product differentiation and bidding for new varieties (2020)
Working Paper: Market size, product differentiation and bidding for new varities (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:11943

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP11943

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().