Exchange Rates and Foreign Direct Investment in Oligopolies
نویسندگان
چکیده
This paper examines the effects of exchange rates on R&D activities and international strategy choices of the oligopolies. We develop a three-stage game-theoretic model in which two firms located in two different countries (a developing and a developed one) choose the mode of foreign expansion in the first stage. They decide how much to spend on R&D, and how much to sell in domestic and foreign markets, in the second and the third stages, respectively. According to the results appreciation of developing country’s currency may change the decision of the developed country firm from export to foreign direct investment. JEL Classifications : F23, L10, O34
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