Does market familiarity bless multinational in strategic competition?

Chul-Woo Kwon and Harvey Lapan

Japan and the World Economy, 2011, vol. 23, issue 1, 58-62

Abstract: This paper considers a competition between two multinationals (U, J) who compete in a third market (K). The multinationals have identical cost structures, but differ in that J comes from a country that is "taste-similar" to K, and hence produces products that match more closely the preferences of K residents. This similarity gives J an advantage in K's market, and if only one firm enters, J can earn higher profits. However, we show: (i) K may benefit more from the entry of the market-familiar firm (U), and (ii) in a strategic competition between the two firms, the market-familiarity may be a strategic disadvantage.

Keywords: Multinationals; Taste; difference; Market; familiarity; Strategic; advantage (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Does Market Familiarity Bless Multinational in Strategic Competition (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:japwor:v:23:y:2011:i:1:p:58-62

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