Export, foreign direct investment, and joint ventures: Learning the rival's costs through propinquity

Arbeitspapier

We examine the role of cost uncertainty in a firm's choice between exporting and foreign investment in oligopolistic industry. We consider both foreign direct investment and an international joint venture, and allow country-specific and firm-specific cost uncertainty. Unlike exporting, either form of foreign investment exposes home and foreign firms to common country-specific cost shocks, implying a better knowledge of each other's country-specific shocks. Further, a joint venture allows the firms to learn each other's firm-specific cost. A firm's plant location decision depends on the interaction of these two effects, which depend on the type of competition and the substitutability of the firm's products.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ISER Discussion Paper ; No. 691

Classification and Topics

• Classification: Wirtschaft ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
• Subject: Country-specific cost uncertainty ; learning ; Foreign investment ; FDI ; Joint ventures ; Internationale Geschäftsbeziehungen ; Export ; Auslandsinvestition ; Joint Venture ; Strategisches Management ; Kostenanalyse ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Creane, Anthony ; Miyagiwa, Kaz
• Event: Veröffentlichung
• (who): Osaka University, Institute of Social and Economic Research (ISER)
• (where): Osaka
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/92794
• Last update: 10.03.2025, 11:42 AM CET