We consider the preferences of a foreign firm and a welfare maximizing host country government for foreign direct investment through direct entry and acquisition in presence of innovation by the firms. We find that relatively superior technology is always used under acquisition. Though profits...

This paper studies the effect of technology spillovers on the entry decision of a multinational enterprise into a foreign market. Two alternative entry modes for a foreign direct investment are considered: Greenfield investment versus acquisition. We find that with quantity competition a...