Centralized decision strategy in ownership investments and export policy

Ku-Chu Tsao, Yan-Shu Lin and Yen-Ju Lin

The Journal of International Trade & Economic Development, 2024, vol. 33, issue 7, 1397-1409

Abstract: This research explores the optimal export policy of a domestic industry characterized by numerous multinational enterprises (MNEs) co-existing with cross-border ownership investments in foreign firms and exports to a foreign country. We demonstrate that the optimal export policy depends on whether MNEs make centralized or decentralized decisions in ownership investments. With decentralized decision-making, the optimal export policy can be either a subsidy or a tax, while with centralized decision-making, it is a tax. Furthermore, we examine how the optimal trade policy responds to the optimal strategy of centralized decision-making by MNEs. Our results show that under certain circumstances, the optimal trade policy is an export subsidy, and MNEs prefer to voluntarily relinquish centralized decision-making, even when they have the option to control the production levels of foreign partner firms.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/09638199.2023.2271083 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:jitecd:v:33:y:2024:i:7:p:1397-1409

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RJTE20

DOI: 10.1080/09638199.2023.2271083

Access Statistics for this article

The Journal of International Trade & Economic Development is currently edited by Pasquale Sgro, David E.A. Giles and Charles van Marrewijk

More articles in The Journal of International Trade & Economic Development from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().