Follow-my-leader FDI and collusion

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Title: Follow-my-leader FDI and collusion
Authors: Leahy, Dermot
Pavelin, Stephen
Permanent link: http://hdl.handle.net/10197/1283
Date: Mar-2001
Abstract: This paper presents a simple model to illustrate the following idea: domestic rivals may be motivated to setup foreign production in the same country because the replication of each other’s foreign direct investment (FDI) facilitates collusive behaviour in the market in which they compete. This implies positive interdependence between firms’ FDI decisions, i.e. foreign investment by one firm brings increased incentive for others to follow-suit. So, we highlight a mechanism that propagates FDI clusters: a flurry of investment from one country, or region, to another.
Funding Details: European Commission
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Subject LCSH: Investments, Foreign
Industrial location
Industrial clusters
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Working Papers & Policy Papers

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