Horizontal FDI in a dynamic Cournot-Oligopoly with endogenous entry

Arbeitspapier

Entry in a homogeneous Cournot-oligopoly is excessive if and only if there is business-stealing (Amir et al. 2014). The excessive entry prediction has been derived primarily for closed economies and using a welfarist benchmark. We extend this framework and allow for (1) horizontal FDI in a multi-period setting and (2) interest group-based government behaviour. Opening the market to greenfield investments from abroad tends to aggravate the entry distortion. Moreover, market opening may reduce welfare if a more pronounced entry distortion dominates the gain in consumer surplus. Finally, a government, which places sufficiently little weight on the interests of consumers, will object to market opening, even if welfare rises.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IAAEU Discussion Paper Series in Economics ; No. 03/2020

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; International Investment; Long-term Capital Movements ; Oligopoly and Other Imperfect Markets
• Subject: Excessive Entry ; Cournot-Oligopoly ; Horizontal FDI ; Political Support Function

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Goerke, Laszlo
• Event: Veröffentlichung
• (who): University of Trier, Institute for Labour Law and Industrial Relations in the European Union (IAAEU)
• (where): Trier
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/214730
• Last update: 10.03.2025, 11:43 AM CET