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North-North FDI, exporting and the first mover advantage

Andrzej Cieślik ()

Bank i Kredyt, 2015, vol. 46, issue 2, 109-128

Abstract: In this paper we study the role of the first mover advantage in the choice between exporting and FDI among developed countries. We identify the conditions necessary for exporting and FDI, depending on trade costs and the cost of foreign investment. We demonstrate that four possible types of equilibria: a monopoly FDI equilibrium, a monopoly exporting equilibrium, a leader-follower duopoly FDI equilibrium, and a leader-follower duopoly exporting equilibrium, may emerge in the short-run depending on various combinations of the key parameters of the model.

Keywords: exporting; foreign direct investment; leader-follower model; proximity-concentration tradeoff (search for similar items in EconPapers)
JEL-codes: F23 (search for similar items in EconPapers)
Date: 2015
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Handle: RePEc:nbp:nbpbik:v:46:y:2015:i:2:p:109-128