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Investor-State Dispute Settlement and Multinational Firm Behavior

Guttorm Schjelderup () and Frank Stähler ()

No 8532, CESifo Working Paper Series from CESifo

Abstract: This paper shows that Investor-State Dispute Settlements (ISDS) makes multinational firms more aggressive by increasing cost-reducing investments with the aim to enlarge the potential compensation an ISDS provision may offer. While a larger investment reduces the market distortion, it will also make potential compensations larger. Consequently, potential compensations to a foreign investor do not imply a zero-sum game. ISDS may decrease domestic welfare, in particular if the investment leads to the establishment of an export platform, and we find that even global welfare may decline.

Keywords: investor-state dispute settlement; multinational enterprises; foreign direct investment; TTIP; TPP (search for similar items in EconPapers)
JEL-codes: F21 F23 F53 F55 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-int and nep-isf
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Working Paper: Investor-State Dispute Settlement and Multinational Firm Behavior (2020) Downloads
Working Paper: Investor State Dispute Settlement and Multinational Firm Behavior (2017) Downloads
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