A Model of Competition Between Multinational Firms

Onur Koska

No 911, Working Papers from University of Otago, Department of Economics

Abstract: This study focuses on the theory of how multinational firms choose their entry modes between alternative options (i.e., trade, greenfield investment, or acquisition). In a comprehensive model of strategic decision-making with more than one multinational firm, it delineates how a multinational firm's entry mode influences a rival multinational firm's market entry behavior and how exogenous factors (e.g., market size, firms' production cost, per-unit trade cost and fixed investment cost) affect the optimal entry modes. The main finding of the study is that competition among multinational firms substantially affects their optimal entry modes such that competition implies different entry modes compared to no competition.

Keywords: Market Entry; Foreign Direct Investment; Acquisition; Trade (search for similar items in EconPapers)
JEL-codes: D21 F23 L13 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2009-10, Revised 2009-10
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http://www.otago.ac.nz/economics/research/otago077126.pdf First version, 2009 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:otg:wpaper:0911

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