QUID PRO QUO FOREIGN INVESTMENT*

Elias Dinopoulos

Economics and Politics, 1989, vol. 1, issue 2, 145-160

Abstract: The paper analyzes the phenomenon of industry‐specific direct foreign investment (DFI) which occurs with the view to defusing the threat of future protection by the host country (quid pro quo), under alternative imperfectly competitive market structures. It is established that, even in the absence of government intervention, firms in imperfectly competitive markets change the level of trade and DFI in response to future protectionist threats.

Date: 1989
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