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Title:
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| Number: | 06-16 |
| Author: |
Jota Ishikawa and Kaz Miyagiwa
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| Issue Date: | November 2006 |
| Abstract: | We compare the relative effect of a voluntary export
restraint (VER) and a price undertaking on foreign firms’ incentive to
engage in FDI. We emphasize foreign rivalry as a determinant of FDI. We
show, in a model that has two foreign firms competing with a home firm
in the home country, that a price undertaking induces more FDI than a
VER. The home country government, operating under the constraint to
protect the home firm, is generally better off settling an antidumping
case with a VER than with a price undertaking. |
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