Abstract
AbstractCooperation among rival firms raises serious skepticism among economists, policymakers, and legal experts, since it generally hurts consumers. We show that this may not be the case in an open economy with strategic foreign direct investment (FDI). Under Cournot competition, increased cooperation among firms reduces the domestic welfare, but it may benefit the consumers by attracting FDI. Under Bertrand competition with differentiated goods, increased cooperation may increase consumer surplus, and it may increase or decrease the domestic welfare by attracting FDI.
Publisher
Springer Science and Business Media LLC
Subject
Management of Technology and Innovation,Organizational Behavior and Human Resource Management,Strategy and Management,Economics and Econometrics
Reference25 articles.
1. Arrow, A.J. (1962). Economic welfare and the allocation of resources for inventions. In R. Nelson (Ed.), The rate and direction of inventive activity. Princeton, NJ: Princeton University Press. http://www.nber.org/books/univ62-1
2. Backus, M., Christopher C., & Sinkinson, M. (2019). The common ownership hypothesis: Theory and evidence. Economic Studies at Brookings, 1980–2017. https://www.brookings.edu/wp-content/uploads/2019/02/ES_20190205_Common-Ownership.pdf
3. Backus, M., Conlon, C., & Sinkinson, M. (2021). Common ownership in America: 1980–2017. American Economic Journal: Microeconomics, 13(3), 273–308. https://doi.org/10.1257/mic.20190389
4. Clarke, R., & Collie, D. R. (2003). Product differentiation and the gains from trade under Bertrand duopoly. Canadian Journal of Economics, 36(3), 658–683. https://doi.org/10.1111/1540-5982.t01-2-00007
5. Collie, D. R. (1996). Gains and losses from unilateral free trade under oligopoly. Recherches E´ Conomiques De Louvain, 62(2), 191–202. https://doi.org/10.1017/S0770451800055706