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Export versus FDI in Cournot duopoly framework

Author

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  • Andrzej Cieslik

    (University of Warsaw)

Abstract

In this paper we study the choice between exporting and foreign direct investment (FDI) in the Cournot duopoly framework. First, we identify the conditions necessary for exporting and FDI, depending on costs of exporting and the cost of foreign investment. Then, we discuss various proximity-concentration tradeoffs. Finally, we demonstrate that six possible types of equilibriums may emerge depending on various combinations of the key parameters of the model. These equilibriums include: a monopoly FDI equilibrium, a monopoly exporting equilibrium, a domestic monopoly equilibrium, a duopoly FDI equilibrium, a duopoly exporting equilibrium, and no entry equilibrium.

Suggested Citation

  • Andrzej Cieslik, 2015. "Export versus FDI in Cournot duopoly framework," Working Papers 11/2015, Institute of Economic Research, revised Mar 2015.
    • Handle: RePEc:pes:wpaper:2015:no11
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    Cited by:

    1. Andrzej Cieślik, 2015. "Imperfect competition, productivity differences and proximity concentration trade-offs," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 40.

    More about this item

    Keywords

    exporting; foreign direct investment; proximity-concentration tradeoff;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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