A model of competition between multinationals

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2015-8

Author

Koska, Onur A

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This study models competition between multinationals sequentially entering the same market, and analyzes how they choose their entry modes between trade, greenfield investment and acquisition, and how competition amongst them affects their choices. I discuss two important factors that lead a multinational whether or not to acquire a local firm: the intensity of pre- and post-acquisition competition. The former determines both the acquisition price and the profitability of the next best alternative entry mode, whereas the latter determines the extent of business stealing by the rival. The results point to a non-linear relationship between trade and investment liberalization and foreign direct investment.

Subject Keywords

Market Entry, Foreign Direct Investment, Acquisition, Trade

URI

http://www2.feas.metu.edu.tr/metusd/ojs/index.php/metusd/article/view/731
https://hdl.handle.net/11511/58236

Journal

ODTÜ Gelişme Dergisi

Collections

Department of Economics, Article

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Citation Formats

O. A. Koska, “A model of competition between multinationals,” ODTÜ Gelişme Dergisi, vol. 42, no. 2, pp. 271–298, 2015, Accessed: 00, 2020. [Online]. Available: http://www2.feas.metu.edu.tr/metusd/ojs/index.php/metusd/article/view/731.