Vertical foreign direct investment, welfare, and employment

Georg Götz, Walter Elberfeld () and Frank Stähler

Vienna Economics Papers from University of Vienna, Department of Economics

Abstract: This paper shows that vertical foreign direct investemt will reduce prices but the aggregate welfare effect is unambiguaously positive only under free market entry. Using a standard model of imperfect competition, we develop this result by considering two different cases. In the first case, the total number of firms is fixed, and we show that national and multinational firms may coexist. In the second case, we allow for market entry, and we focus on situations in which either only national or only multinational firms are active. Furthermore, we discuss impact effects on labor demand. We show that a decline in foreign wages increases domestic employment.

JEL-codes: F12 F15 (search for similar items in EconPapers)
Date: 2002-10
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://papersecon.univie.ac.at/RePEc/vie/viennp/vie0213.pdf (application/pdf)

Related works:
Journal Article: Vertical Foreign Direct Investment, Welfare, and Employment (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vie:viennp:vie0213

Access Statistics for this paper

More papers in Vienna Economics Papers from University of Vienna, Department of Economics
Bibliographic data for series maintained by Paper Administrator ().