Revisiting oligopolistic reaction: are decisions on foreign direct investment strategic complements? - Archive ouverte HAL Access content directly
Journal Articles Journal of Economics and Management Strategy Year : 2002

Revisiting oligopolistic reaction: are decisions on foreign direct investment strategic complements?

(1) , (2) , (1)
1
2

Abstract

Knickerbocker (1973) introduced the notion of oligopolistic reaction to explain why firms follow rivals into foreign markets. We develop a model that incorporates central features of Knickerbocker's story--oligopoly, uncertainty, and risk aversion--to establish the conditions required to generate follow-the-leader behavior. We find that rival foreign investment will make risk-neutral firms less inclined to move abroad once its rivals have done so. We show that Knickerbocker's prediction relies on risk aversion and derive an expression for the minimum amount of risk aversion needed to generate oligopolistic reaction.
Fichier principal
Vignette du fichier
fdi.pdf (121.18 Ko) Télécharger le fichier
Origin : Explicit agreement for this submission
Loading...

Dates and versions

hal-01017589 , version 1 (02-07-2014)

Identifiers

Cite

Keith Head, Thierry Mayer, John Ries. Revisiting oligopolistic reaction: are decisions on foreign direct investment strategic complements?. Journal of Economics and Management Strategy, 2002, pp.453-472. ⟨hal-01017589⟩
81 View
1696 Download

Share

Gmail Facebook Twitter LinkedIn More