Trade Liberalization and FDI

• Main Authors: Ya-Yuan Lu, 呂雅媛
• Other Authors: Cheng-Hau Peng
• Format: Others
• Language: en_US
• Published: 2015
• Online Access: http://ndltd.ncl.edu.tw/handle/99473345164808791416

碩士 === 輔仁大學 === 經濟學系碩士班 === 103 === In the past decade, many multinational enterprises (MNEs) tend to invest overseas by building the plant and provide their merchandise to surrounding countries. The main purpose of this thesis is to investigate the effects of trade liberalization on foreign firms FDI decisions in the presence of different market sizes and cost asymmetry. This thesis considers both Bertrand and Cournot competition. We find that under both Bertrand and Count competition, the efficient foreign firm may choose to FDI in the small market if the trade cost is high. Under free trade, both firms will choose to FDI in the large market under Cournot competition. The cost-efficient (-inefficient) firm will locate at the large (small) market under Bertrand competition. That is to say, trade liberalization is harmful to the small market in acquiring the cost-efficient firm’s FDI under both Bertrand and Cournot competition.