Abstract
This paper studies 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. In contrast to existing approaches, the acquisition price and the profits under both entry modes are endogenously determined. Interestingly, we find that the optimal entry mode decision is a ected by the competition intensity in the market in a non-monotonic way. When markets are very much or very little competitive, greenfield investment is the optimal entry mode, while for intermediate values it is acquisition.
| Item Type: | Paper |
|---|---|
| Keywords: | Foreign direct investment ; multinational enterprise ; greenfield investment ; acquisition ; 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-13-9 |
| Language: | English |
| Item ID: | 13 |
| Date Deposited: | 13. Apr 2005 |
| Last Modified: | 04. Nov 2020 12:58 |
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