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...

Designing appropriate import tariff rates is crucial for global trade. In this paper, we propose game-theoretic models to investigate how tariff policies affect the competition of multinational firms (MNFs) in a global trading environment. The MNFs sell substitutable products and compete in two...