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Chapter 19 The Effect of New Environment on Foreign Direct Investment in an Oligopolistic Heckscher–Ohlin Model

Contemporary and Emerging Issues in Trade Theory and Policy

ISBN: 978-0-4445-3190-2, eISBN: 978-1-84950-541-3

ISSN: 1574-8715

Publication date: 2 June 2008

Abstract

We develop a 2×2×2 model of international trade in which one of the sectors is oligopolistic. The oligopolistic sector consists of a given number of a priori identical firms belonging to one of the two countries, but some deciding to locate in the other country so as to realize higher profits. If a firm locates in the foreign country, its technological capability is assumed to go down due to the alien environment. In this framework we examine the effect of the environment on the level of foreign direct investment and on factor prices in the two countries.

Keywords

Citation

Lahiri, S. and Ono, Y. (2008), "Chapter 19 The Effect of New Environment on Foreign Direct Investment in an Oligopolistic Heckscher–Ohlin Model", Marjit, S. and Yu, E.S.H. (Ed.) Contemporary and Emerging Issues in Trade Theory and Policy (Frontiers of Economics and Globalization, Vol. 4), Emerald Group Publishing Limited, Bingley, pp. 367-377. https://doi.org/10.1016/S1574-8715(08)04019-0

Publisher

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Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited