Analysing foreign market entry: the choice between greenfield investment and acquisitions

Arbeitspapier

This paper formalises the choice a firm has to face when entering a foreign market via FDI as between setting up an entirely new plant (greenfield investment) or acquiring an existing indigenous firm. Our results show that in an asymmetric duopoly situation a new entrant will normally be best off by acquiring an existing indigenous low-technology firm, thus, forming a duopoly with an indigenous high-technology firm. While in welfare terms the entry of the foreign firm damages the country in most cases, there exist some possibilities that welfare, particularly after a greenfield investment by the foreign firm, is higher than before entry, even when there is full profit repatriation.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Trinity Economic Papers Series, Technical Paper ; No. 1998,1

Classification and Topics

• Classification: Wirtschaft ; Multinational Firms; International Business ; Oligopoly and Other Imperfect Markets
• Subject: Markteintritt ; Direktinvestition ; Duopol ; Wohlfahrtseffekt ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Görg, Holger
• Event: Veröffentlichung
• (who): Trinity College, Department of Economics
• (where): Dublin
• (when): 1998

Further information

• Handle: http://hdl.handle.net/10419/1282