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Host market competition, foreign FDI and domestic welfare

Tsai, Yingyi; Mukherjee, Arijit; Chen, Jong-Rong


Yingyi Tsai

Professor of Industrial Economics

Jong-Rong Chen


This paper studies the impact on domestic welfare and a foreign firm's entry mode of a greater host market competition. We find that a stronger domestic competition may attract or deter FDI. We also show that higher domestic competition can raise domestic welfare either when it attracts FDI or when it does not affect the foreign firm's entry mode choice. Nonetheless, higher domestic competition may reduce domestic welfare if FDI is deterred. Our finding suggests that competition policy in the host country ought to be complemented by its foreign investment policy when foreign firm makes its FDI/export decision.


Tsai, Y., Mukherjee, A., & Chen, J. (2016). Host market competition, foreign FDI and domestic welfare. International Review of Economics and Finance, 42, 13-22.

Journal Article Type Article
Acceptance Date Oct 13, 2015
Online Publication Date Oct 21, 2015
Publication Date Mar 1, 2016
Deposit Date Dec 9, 2018
Journal International Review of Economics & Finance
Print ISSN 1059-0560
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 42
Pages 13-22
Keywords Economics and Econometrics; Finance
Public URL
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