Partial collusion and foreign direct investment

Collie, David ORCID: https://orcid.org/0000-0002-3132-648X 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:	Schools > Business (Including Economics)
Subjects:	H Social Sciences > HB Economic Theory
Publisher:	Cardiff University
Date of First Compliant Deposit:	30 March 2016
Last Modified:	28 Oct 2022 10:22
URI:	https://orca.cardiff.ac.uk/id/eprint/77995

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