Competition for multiproduct firms

Hong Feng; Jie Ma; Yang Yue

doi:10.1111/roie.12648

Competition for multiproduct firms

Hong Feng
, Jie Ma^*
, Yang Yue

^*Corresponding author for this work

School of Economics and Management, Harbin Institute of Technology Shenzhen
University of International Business and Economics
Xiamen University

Research output: Contribution to journal › Article › peer-review

1 Scopus citations

Abstract

We use a first-price menu auction approach to studying a fiscal competition between two countries of different sizes to attract a foreign monopolist intending to supply two vertically differentiated products in a regional economy composed of the same two countries. Market size and cannibalization exclusively determine the firm's location choice. Though import substitution provides each country with an incentive to bid for FDI, this does not affect the firm's location decisions. As a result, fiscal competition for FDI only involves transfers between the host country/countries of FDI and the firm. We also report novel welfare effects of FDI competition.

Original language	English
Pages (from-to)	904-930
Number of pages	27
Journal	Review of International Economics
Volume	31
Issue number	3
DOIs	https://doi.org/10.1111/roie.12648
State	Published - Aug 2023
Externally published	Yes

Keywords

FDI competition
cannibalization
import substitution
market size
welfare

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10.1111/roie.12648

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author = "Hong Feng and Jie Ma and Yang Yue",

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KW - import substitution

KW - market size

KW - welfare

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Competition for multiproduct firms

Abstract

Keywords

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