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Multinational Corporations, Stackelberg Leadership, and Tariff‐jumping

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  • Stuart Dixon

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.

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  • Stuart Dixon, 2006. "Multinational Corporations, Stackelberg Leadership, and Tariff‐jumping," Review of International Economics, Wiley Blackwell, vol. 14(3), pages 414-426, August.
    • Handle: RePEc:bla:reviec:v:14:y:2006:i:3:p:414-426
    DOI: 10.1111/j.1467-9396.2006.00652.x
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    1. van Damme, Eric & Hurkens, Sjaak, 1999. "Endogenous Stackelberg Leadership," Games and Economic Behavior, Elsevier, vol. 28(1), pages 105-129, July.
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    Cited by:

    1. Maja Barac & Rafael Moner‐Colonques, 2022. "Leadership in internationalization strategies," Manchester School, University of Manchester, vol. 90(3), pages 293-318, June.
    2. Canabal, Anne & White III, George O., 2008. "Entry mode research: Past and future," International Business Review, Elsevier, vol. 17(3), pages 267-284, June.

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