Competition for Natural Resources and the Hold-Up Problem

Sebastian Kessing and Carsten Hefeker

VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy from Verein für Socialpolitik / German Economic Association

Abstract: We study the role of competition for the hold-up problem in foreign direct investment in resource-based industries. The host country government is not only unable to commit not to expropriate investment ex post, but is also unable to commit to the provision of local resources. In the case of competition for local resources this dual commitment problem triggers higher investment levels, increases host countries revenues, but hurts profits of international investors. Domestic firms can play a similar role as an alternative instrument for host country governments to generate higher foreign investment in an environment of weak property rights.

JEL-codes: F21 F23 Q34 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Competition for natural resources and the hold-up problem (2017)
Journal Article: Competition for natural resources and the hold‐up problem (2017)
Working Paper: Competition for Natural Resources and the Hold-Up Problem (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc14:100361

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