We develop a partial equilibrium model in which identical foreign firms locate in a host country and export their produce to another country (the consuming country). These firms compete with domestic firms in the consuming country under oligopoly. The two sets of firms differ in cost structures....

This paper develops a theoretical model of direct foreign investment to analyze the changing role of regulatory policies in developing countries in the presence of globalization. The main result is that deregulation is an optimal responde to globalization, at least in countries that face a FDI...

In this paper, we have emphasized information problems which lead to home bias and insufficient amounts of capital inflows.

Foreign direct investment (FDI) is observed to be a predominant form of capital flows to low and middle income countries with insufficiently developed capital markets. This paper analyzes the problem of channelling domestic savings into productive investment in the presence of asymmetric...