Endogenous Market Structures and the Gains from Foreign Direct Investment

Roberto A. De Santis () and Frank Stahler
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Frank Stahler: University of Kiel

No 56, Royal Economic Society Annual Conference 2002 from Royal Economic Society

Abstract: This paper discusses the gains from liberalizing foreign direct investment (FDI) in a two country setting with endogenous market structures. Two different scenarios are investigated. In the first scenario, headquarters are run in the domestic country only and the FDI regime is compared to the intersectoral trade case. If multinational and national firms coexist, market concentration occurs and FDI is welfare improving for the foreign country, but welfare declining for the domestic country. In the second scenario, headquarters are run in both countries and the FDI regime is compared to the intraindustry trade case. This regime switch leads to mutual welfare gains, irrespective of market structure effects.

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Date: 2002-08-29
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Related works:
Working Paper: Endogenous Market Structure and the Gains from Foreign Direct Inverstment (1999)
Journal Article: Endogenous market structures and the gains from foreign direct investment (2004)
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Persistent link: http://EconPapers.repec.org/RePEc:ecj:ac2002:56

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