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Commercial Policy and Foreign Ownership |
Jota
Ishikawa, Yoichi Sugita, and Laixun Zhao |
RIE(2011) |
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In a model of cross-border
partial ownership, we have investigated the effects of commercial policies
(such as import tariffs, production subsidies, and regulation on the foreign
ownership) when exports and FDI coexist. ∙ If commercial policies
facilitate foreign ownership as in the argument for tariff-jumping FDI, then
Proposition 6 implies that the increase in foreign ownership will enhance the
backfiring effects of tariffs and subsidies on independent domestic firms. ∙ It would be interesting to
explore the case with partial control and/or partial delegation. ∙ Also, even under Bertrand
competition with differentiated goods instead of Cournot competition as
adopted here, FDI could generate horizontal market linkages through which
tariffs and production subsidies may not benefit locally owned firms. |