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Investor State Dispute Settlement and Multinational Firm Behavior

Guttorm Schjelderup () and Frank Stähler ()

No 2017/4, Discussion Papers from Norwegian School of Economics, Department of Business and Management Science

Abstract: Investor-state dispute settlements (ISDS) were supposed to become an integral part of multilateral trade and investment agreements although the partner countries of these deals do not suffer from substantial institutional weakness. This paper shows why multinational firms lobby for ISDS also in this environment beyond the potential compensation an ISDS provision may offer. ISDS makes them more aggressive by increasing cost-reducing investment. Therefore, potential compensations to a foreign investor do not imply a zero-sum game, and competition with a domestic firm does not necessarily help but may imply even more excessive investment.

Keywords: Investor-State Dispute Settlement; Mulitnational Enterprises; Foreign Direct Investment; TTIP; TPP (search for similar items in EconPapers)
JEL-codes: F21 F23 F53 F55 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-int
Date: 2017-03-30
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