The multinational firm versus the host country: A bargaining power approach

This paper aims at evaluating the scope of the bargaining power theory which considers direct investment restrictions—particularly regarding capital ownership—as the result of a bargaining process between the MNE and the host country. Three points are specifically studied: the conflict between the host country and the MNE about the conditions of location; the bargaining power features as they are studied in econometric tests and in monographies; and the bargaining dynamics between the MNE and the host country. What does remain of the “obsolete theory” thesis developed by Vernon which is taken up today within the framework of game theory?