Please use this identifier to cite or link to this item: https://hdl.handle.net/2440/116380
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Type: Working paper
Title: Foreign Direct Investment as a Signal
Author: Koska, O.
Long, N.
Staehler, F.
Citation: Review of International Economics, 2018; 26(1):60-83
Publisher: MPRA uni-muenchen.de
Issue Date: 2015
ISSN: 0965-7576
1467-9396
Statement of
Responsibility: 
Onur A. Koska, Ngo Van Long, Frank Stähler
Abstract: This paper models oligopolistic competition among potential multinational firms in an environment of firm heterogeneity, incomplete information on costs, and strategic interactions. We show that foreign direct investment is more likely if it can serve as a signal of productivity in an environment of incomplete information as firms would like to avoid sending a low productivity signal. Our model shows that this effect is strong enough such that foreign direct investment can be an optimal foreign entry mode even if trade costs are zero.
Rights: © 2017 John Wiley & Sons Ltd
DOI: 10.1111/roie.12303
Published version: https://mpra.ub.uni-muenchen.de/68025/1/MPRA_paper_68025.pdf
Appears in Collections:Aurora harvest 3
Economics publications

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