Market Size, Cannibalization and Policy Competition for a Multiproduct Multinational Firm
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| Title | Market Size, Cannibalization and Policy Competition for a Multiproduct Multinational Firm
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| Author | Ma Jie , Yue Yang and Duan Qi |
| Organization | Peking University |
| Email | jiema@gsm.pku.edu.cn;yueyang@gsm.pku.edu.cn;duanqi@gsm.pku.edu.cn |
| Key Words | Foreign Direct Investment (FDI); Policy Competition; Market Size;Cannibalization; Welfare |
| Abstract | This paper studies policy competition for a foreign-owned multiproduct monopolist firm producing two products that are horizontally differentiated between two countries of different size. We show that the equilibrium outcome of FDI competition is determined by the interaction between the market size effect and the cannibalization effect, and countries’ subsidy policies. Welfare effects of competition for FDI are derived; in particular, we show that the competing countries may Pareto strictly gain from or Pareto strictly lose from FDI competition. |
| Serial Number | WP132 |
| Time | 2011-10-27 |
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