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- Title
Multinationals' Mode of Entry in the Presence of Upstream Spillovers.
- Authors
BALSVIK, RAGNHILD
- Abstract
Multinationals' mode of foreign expansion may depend on their expectations of spillovers. I consider a monopolist with a vertical production structure where outsourcing of intermediates to a host country firm is one of three possible entry modes. Spillovers generate threat of entry of a new input producer. With incomplete outsourcing contracts that result in the two firms bargaining over how to share the potential surplus, upstream spillovers do not necessarily benefit the downstream multinational. If the multinational instead allows the supplier to set the price of intermediates (successive monopoly), it clearly benefits from upstream spillovers.
- Subjects
INTERNATIONAL business enterprises; MONOPOLISTIC competition; CONTRACTING out; SUPPLIERS; EXTERNALITIES; ECONOMIC competition; TECHNOLOGY transfer; SUBSIDIARY corporations; CONJOINT analysis
- Publication
Economica, 2010, Vol 77, Issue 306, p334
- ISSN
0013-0427
- Publication type
Article
- DOI
10.1111/j.1468-0335.2008.00771.x