Playing away to win at home

Stephen Pavelin
Authors registered in the RePEc Author Service: Dermot Leahy

No 200626, Working Papers from School of Economics, University College Dublin

Abstract: This paper presents a model of the interaction between two rival firms based in the same country. Each firm must decide how to serve a foreign market (export or foreign production) and how much to invest in a corporate-wide asset that reduces production costs and/or augments the willingness-to-pay for their product. In this scenario, the firms’ foreign direct investment decisions are interdependent. Furthermore, strategic motives for FDI relate not to a firm’s domestic, as well as foreign, market profits. One possibility is that a firm sets up overseas production even though its foreign market profits would be higher by exporting.

Keywords: Foreign direct investment; Multinational firm; R&D; Oligopoly; Investments, Foreign; International business enterprises; Research and development projects; Oligopolies (search for similar items in EconPapers)
JEL-codes: F23 L13 O30 (search for similar items in EconPapers)
Date: 2006-12
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http://hdl.handle.net/10197/1271 First version, 2006 (application/pdf)

Related works:
Journal Article: Playing away to win at home (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ucn:wpaper:200626

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