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Partial collusion and foreign direct investment

Collie, David and Norman, George 2013. Partial collusion and foreign direct investment. [Working Paper]. Cardiff Economics Working Papers, Cardiff: Cardiff University.

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Abstract

We show that the static duopoly model in which firms choose between exporting and foreign direct investment is often a prisoners’ dilemma game in which a switch from exporting to foreign direct investment reduces profits. By contrast, we show that when the game is repeated there is a range of parameters for which the firms can partially collude by choosing to export rather than invest. In this range, a reduction in export costs may undermine the partial collusion, causing a switch from export to investment.

Item Type: Monograph (Working Paper)
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Subjects: H Social Sciences > HB Economic Theory
Publisher: Cardiff University
Last Modified: 04 Jun 2017 08:26
URI: http://orca.cf.ac.uk/id/eprint/77995

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