Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/219627 
Year of Publication: 
2015
Series/Report no.: 
Institute of Economic Research Working Papers No. 11/2015
Publisher: 
Institute of Economic Research (IER), Toruń
Abstract: 
In this paper we study the choice between exporting and foreign direct investment (FDI) in the Cournot duopoly framework. First, we identify the conditions necessary for exporting and FDI, depending on costs of exporting and the cost of foreign investment. Then, we discuss various proximity-concentration tradeoffs. Finally, we demonstrate that six possible types of equilibriums may emerge depending on various combinations of the key parameters of the model. These equilibriums include: a monopoly FDI equilibrium, a monopoly exporting equilibrium, a domestic monopoly equilibrium, a duopoly FDI equilibrium, a duopoly exporting equilibrium, and no entry equilibrium.
Subjects: 
exporting
foreign direct investment
proximity-concentration tradeoff
JEL: 
F23
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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