Foreign direct investment in duopoly: When is it optimal to invest abroad?

Hebert Dawid () and Benteng Zou
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Hebert Dawid: Department of Business Administration and Economics and Institute of Mathematical Economics, Bielefeld University

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: In this paper, we analyze optimal foreign direct investment of a firm which operates in a duopolistic market. We characterize certain technology spillover threshold and show that for a speed of transfer below this threshold, there is a unique locally asymptotic stable steady state with a positive capital stock in the developing country. Furthermore, this threshold exposes what level of technology should take as foreign direct investment.

Keywords: foreign direct investment; technology spillovers; optimal control (search for similar items in EconPapers)
JEL-codes: C61 D92 F21 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:14-23

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