A Model of Competition Between Multinational Firms
This study focuses on the theory of how multinational firms choose their entry modes between alternative options (i.e., trade, green field investment, or acquisition). In a comprehensive model of strategic decision-making with morethan one multinational firm, it delineates how a multinational firm's entry mode influences a rival multinational firm's market entry behavior and how exogenousfactors (e.g., market size, firms' production cost, per-unit trade cost and fixed investment cost) affect the optimal entry modes. The main finding of the study is that competition among multinational firms substantially affects their optimal entry modes such that competition implies different entry modes compared to no competition.
Publisher: Department of Economics, University of Otago
Series number: 911
Keywords: Market Entry; Acquisition; Trade; Foreign direct investment
Research Type: Discussion Paper