Abstract
This paper studies the effect of technology spillovers on the entry decision of a multinational enterprise into a foreign market. Two alternative entry modes for a foreign direct investment are considered: Greenfield investment versus acquisition. We find that with quantity competition a spillover makes acquisitions less attractive, while with price competition acquisitions become more attractive. Asymmetric information about potential spillovers always reduces the number of acquisitions independently of whether the host country or the entrant has private information. Interestingly, we find that asymmetric information always hurts the entrant, while it sometimes is in favor of the host country.
Item Type: | Paper |
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Keywords: | Foreign direct investment ; multinational enterprise ; enty mode ; technology spillovers ; asymmetric information ; transition economies |
Faculties: | Economics Economics > Munich Discussion Papers in Economics Economics > Munich Discussion Papers in Economics > Industrial Organization Economics > Munich Discussion Papers in Economics > International Trade |
Subjects: | 300 Social sciences > 300 Social sciences, sociology and anthropology 300 Social sciences > 330 Economics |
JEL Classification: | D43, F21, F23, L13, P31 |
URN: | urn:nbn:de:bvb:19-epub-12-4 |
Language: | English |
Item ID: | 12 |
Date Deposited: | 13. Apr 2005 |
Last Modified: | 04. Nov 2020, 17:44 |