This paper agrues that the prices of intermediates may influence the pattern of foreign direct investment (FDI). In our model, two downstream firms select whether to serve each other's markets through exports of FDI, always sourcing the intermediate good or service at the location of production....

We study the impact of foreign direct investment (FDI) policies when source firms locate some production in two host countries. By reducing its tax on multinational production, a host country can attract additional FDI, some of which is diverted from other host countries. The shift in FDI causes...

We construct an oligopoly model in which a multinational firm has a superior technology compared to local firms. Workers employed by the multinational acquire knowledge of its superior technology. The multinational may pay a wage premium to prevent local firms from hiring its workers and thus...

Oligopolists from two source countries invest in a common host country to take advantage of low costs. A selective subsidy to multinational production encourages foreign direct investment (FDI) from the favored country but crowds out FDI from the other source. Such a subsidy also shifts rents...

Note: The following is a description of the paper and not the actual abstract. We consider a model where firms from a high-cost source country shift some of their production to a low-cost host country. Firms earn profits since the output market is a Cournot oligopoly. Due to a fixed supply of...