It is well known that high tariffs tend to induce direct foreign investment (DFI) by encouraging the investors to jump the “tariff-wall”. We argue that in the presence of a “tough” local competitor DFI may not be possible but suitable designed joint-ventures (JV) between the local and...

The importance of factor price equalization (FPE) is widely recognized in economics. The FPE theorem states that, absent any factor intensity reversal, factor prices are equal across countries with identical technologies and product mixes. In a two-factor-two-good-two-country Heckscher-Ohlin...