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FDI may help rival firms

Author

Listed:
  • Junichiro Ishida

    (Osaka University)

  • Noriaki Matsushima

    (Kobe University)

Abstract

This paper presents a two-country model of duopolistic market with vertical relations which leads to a paradoxical result: when upstream firms possess sufficient bargaining power, cost-reducing FDI may actually enhance the rival firm's profit.

Suggested Citation

  • Junichiro Ishida & Noriaki Matsushima, 2005. "FDI may help rival firms," Economics Bulletin, AccessEcon, vol. 6(22), pages 1-8.
    • Handle: RePEc:ebl:ecbull:eb-05f20005
    as

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    File URL: http://www.accessecon.com/pubs/EB/2005/Volume6/EB-05F20005A.pdf
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    References listed on IDEAS

    as
    1. Bughin, Jacques & Vannini, Stefano, 1995. "Strategic direct investment under unionized oligopoly," International Journal of Industrial Organization, Elsevier, vol. 13(1), pages 127-145, March.
    2. Kjell Erik Lommerud & Frode Meland & Lars S¯rgard, 2003. "Unionised Oligopoly, Trade Liberalisation and Location Choice," Economic Journal, Royal Economic Society, vol. 113(490), pages 782-800, October.
    3. Robin Naylor & Michele Santoni, 2003. "Foreign direct investment and wage bargaining," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 12(1), pages 1-18.
    4. Skaksen, Mette Yde & Sorensen, Jan Rose, 2001. "Should trade unions appreciate foreign direct investment," Journal of International Economics, Elsevier, vol. 55(2), pages 379-390, December.
    5. Leahy, Dermot & Montagna, Catia, 2000. "Unionisation and Foreign Direct Investment: Challenging Conventional Wisdom?," Economic Journal, Royal Economic Society, vol. 110(462), pages 80-92, March.
    6. Zhao, Laixun, 1995. "Cross-hauling direct foreign investment and unionized oligopoly," European Economic Review, Elsevier, vol. 39(6), pages 1237-1253, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Junichiro Ishida & Noriaki Matsushima, 2008. "Domestic Competition and Foreign Direct Investment in Unionized Oligopoly," ISER Discussion Paper 0757, Institute of Social and Economic Research, Osaka University, revised Oct 2009.
    2. Yamada, Mai, 2016. "The Optimal Trading Partner for an Upstream Monopolist," MPRA Paper 70325, University Library of Munich, Germany.
    3. Domenico Buccella, 2011. "Labor unions and economic integration: A review," Económica, Instituto de Investigaciones Económicas, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0, pages 25-89, January-D.

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    More about this item

    Keywords

    Cournot competition;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

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