Entry Strategies, Welfare Analysis and Firms’ Behaviors

Wang Xun and Luo Ting

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: Before serving a new market, a multinational enterprise (MNE) has several entry strategies, which include foreign direct investment (FDI), joint venture (JV) and exclusive licensing (EL). Entry cost, market size of the host country, and the discount rate are the main determinants when the MNE chooses its optimal entry strategy. At a certain level of ownership share that the MNE holds, JV will generate the highest social welfare. If firms can choose between competition and collusion, at different levels of the discount rate under FDI and EL, collusive and cheating behavior will happen.

Keywords: Entry strategies; Multinational enterprise; Welfare; Collusion; Cheating (search for similar items in EconPapers)
JEL-codes: D21 F23 I31 L11 L13 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2007-06
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse and nep-mic
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