Multinational firms and strategic FDI subsidies

Yasunori Ishii

    Research output: Contribution to journalArticle

    4 Citations (Scopus)

    Abstract

    A simple three-stage game model of an international Cournot duopoly, consisting of domestic and foreign multinational firms, is exploited to examine strategic FDI subsidies. While in the first stage the governments decide the optimal FDI subsidies, the firms endogenously choose their FDI levels (or subsidiary plant sizes) in the second stage and their output-export levels in the third stage. Thus, this paper finds that while the outflow and inflow FDI subsidies have different effects on firms' FDI choices, the FDI subsidies are used as tools for the implementation of strategic policies and that the optimal FDI subsidies vary, depending on whether the governments assess labor employment.

    Original languageEnglish
    Pages (from-to)292-305
    Number of pages14
    JournalReview of International Economics
    Volume14
    Issue number2
    DOIs
    Publication statusPublished - 2006 May

    ASJC Scopus subject areas

    • Geography, Planning and Development
    • Development

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