Market Structure and Foreign Direct Investment

REVIEW OF INTERNATIONAL ECONOMICS

Posted: 4 Apr 1997

See all articles by José Manuel Campa

José Manuel Campa

University of Navarra - Madrid Campus - IESE Business School; National Bureau of Economic Research (NBER)

Shabtai Donnenfeld

York University - Department of Economics

Shlomo Weber

Southern Methodist University (SMU) - Department of Economics; New Economic School

Abstract

In this paper we investigate how strategic interactions among domestic and foreign producers influence the structure of the industry. Especially, we focus on the foreign firms choice between exporting versus servicing these markets by investing in a plant located in host country when is facing competition from a domestic oligopoly. The empirical investigation reveals that the relationship between FDI and tariffs is not as simple as previously thought. In highly concentrated industries, where strategic behaviour may play an important role, high tariffs rather than low tariffs may lead to less FDI and more imports.

JEL Classification: F13, F23

Suggested Citation

Campa, José Manuel and Donnenfeld, Shabtai and Weber, Shlomo, Market Structure and Foreign Direct Investment. REVIEW OF INTERNATIONAL ECONOMICS, Available at SSRN: https://ssrn.com/abstract=4797

José Manuel Campa

University of Navarra - Madrid Campus - IESE Business School ( email )

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National Bureau of Economic Research (NBER)

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Shabtai Donnenfeld (Contact Author)

York University - Department of Economics ( email )

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Shlomo Weber

Southern Methodist University (SMU) - Department of Economics ( email )

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New Economic School ( email )

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Russia
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