Konrad, Kai A.; Lommerud, Kjell Erik
Foreign direct investment, intra-firm trade and ownership structure.
In: European Economic Review, Vol. 45, No. 3: pp. 475-494
Full text not available from 'Open Access LMU'.
Asymmetric information about true opportunity cost in trade between a multinational and its foreign affiliate can alleviate the hold-up problem in foreign direct investment. Selling shares in the affiliate to locals is also beneficial because it increases the parent multinational's information rent that is protected from a host government's confiscatory taxation. © 2001 Elsevier Science B.V. All rights reserved.