We compare foreign direct investment (FDI) and technology licensing as two modes of entry into a foreign market. While direct entry via FDI dissipates rents in the host country, opportunistic competition from a license may erode rents in the entrant's other markets. Since FDI increases...

In a two-period duopoly model, this paper considers a foreign firm's choice between licensing and FDI and studies the relative impact of these modes of technology transfer on the incentives for innovation of that firm and its domestic rival. Relative to licensing, FDI limits technology...

In a three-country model, this paper investigates linkages between merger incentives of exporting firms and the trade policy of an importing country. When exporting firms come from only one country, the tariff response of the importing country <i>reverses</i> the welfare effects of a merger in the...