Mutinational Corporations, Stackelberg Leadership and Tariff-Jumping

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Abstract

In this paper we consider the traditional entry mode choice of an incumbent monopolist facing entry by a single foreign firm. By allowing entry to be either via exporting or foreign direct investment and for the possibility of stackelberg equilibria where firms can set quantities in one of two time periods, namely “early” or “late,” we find conditions where both cournot and stackelberg equilibria emerge endogenously. Furthermore, by introducing a simple linear tariff, we see that it not only affects the choice of exporting and fdi in a nonlinear way, but that it can also affect the type of equilibrium that emerges.
Original languageEnglish
Pages (from-to)414-426
JournalReview of International Economics
Volume14
Issue number3
DOIs
Publication statusPublished - 1 Jan 2006

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