VOLUNTARY IMPORT EXPANSION AND DIRECT INVESTMENT*

Masao Oda and Robert Stapp

The Japanese Economic Review, 2007, vol. 58, issue 1, 107-117

Abstract: This paper analyses the welfare effects of a market‐share Voluntary Import Expansion (VIE) in the presence of foreign direct investment utilizing a duality approach. Introducing the cost burden of VIE explicitly, this paper considers the conditions under which a market‐share VIE is voluntary to the importing country. It is shown that the voluntary nature of VIE depends upon the capital import, cost burden and price difference effects and that a VIE is truly voluntary if it is accompanied by direct investment. We also show the existence of a complementary relationship between VIE and direct investment in attaining a particular level of welfare.

Date: 2007
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https://doi.org/10.1111/j.1468-5876.2007.00333.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:jecrev:v:58:y:2007:i:1:p:107-117

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