Log in
Economics
1
answer
0
watching
107
views

In round two of the FDI negotiation process between MNES and host governments, _____.
 
a. the MNE is not willing to enter in the absence of some government assurance
b. the MNE enters the host market and earns profits
c. the government may demand renegotiations of the deal
d. the previous deal becomes obsolete

Watch
1
answer
0
watching
107
views

For unlimited access to Homework Help, a Homework+ subscription is required.

manhokwe tawanda
manhokwe tawandaLv10
5 Mar 2021

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

The primary costs of FDI to host countries are:

Loss of sovereignty and patriotism

Adverse effects on competition and exports

Capital outflow

Loss of sovereignty, adverse effects on competition, and capital outflow

____ suggests that FDI, unrestricted by government intervention, will enable countries to tap into their absolute or comparative advantage by specializing in the production of certain goods or services.

The radical view

The free market view

Pragmatic nationalism

Expropriation

What are the benefits of FDI to home countries?

Repatriated earnings from profits from FDI.

Increased exports of components and services to host countries.

Learning via FDI from operations abroad.

All of these answers

When one firm enters a foreign country through FDI, its rivals are likely to follow by undertaking additional FDI in a host country to:

Create knowledge spillover

Discover a new market for its goods

Overcome and combat market failure through FDI

Acquire location advantages or neutralize the first mover’s location advantages

Most countries practice:

Pragmatic nationalism

Free market based FDI

Government embracing radical view

French patriotism

FDI may be viewed as a reflection of firm motivation to extend firm-specific capabilities abroad and their responses to overcome imperfections and failures.

True

False

Most countries practice a totally "free market" view.

True

False

8. Outsourcing is the process of turning over an organizational activity to an outside supplier, located in a foreign country, which will perform it on behalf of the local firm.

True

False

Financial, physical, and technological resources and capabilities are all tangible assets.

True

False

A firm's resources and capabilities are tangible assets a firm uses to choose and implement its strategies.

True

False

An example of low power distance would be when subordinates address their bosses on a first-name basis.

True

False

Benchmarking is an assessment as to whether a firm has resources and capabilities to perform a particular activity in a manner superior to competitors.

True

False

A country with low-masculinity has a more subtle differentiation between the gender roles.

True

False

Setting up subsidiaries abroad so the work can be performed in-house but in the foreign location is also called captive sourcing.

True

False

Managers in low uncertainty avoidance countries rely more on experience and training than managers in high uncertainty avoidance countries who rely more on rules.

True

False

Informal institutions include laws, regulations, and rules.

True

False

The United States is often classified as a collective society.

True

False

A pure market economy characterized by the "invisible hand" of market forces is noted by

John Stuart Mill

Adam Smith

Aristotle

Amatya Zen

Culture is defined in the text as:

The communication between members of similar location.

The collective programming of the mind, which distinguishes the members of one group or category of people from another.

The main component of formal institutions.

The attitudes and behaviors characteristic of a particular social group or organization.

When an expat employee returns to her or his current employer but the employer does not provide attractive opportunities, she/he often may be hired by a competitor firm. Why?

Competitor firms are also interested in globalizing their business.

Former expats bring instant expertise and experience.

Competing firms will pay a higher premium for expertise.

All of these answers

The government taking a "hands-off approach" is known as:

Laissez faire

Command economy

Mixed economy

Liberal approach

Expatriate managers make ideal candidates for top management positions.

True

False

____ are defined as rights associated with the ownership of intellectual property.

Patents

Copyrights

Trademarks

Intellectual property rights

In a collective society:

Family units are highly valued.

Being an entrepreneur is a popular mindset

Being different than your neighbor is important.

Outsiders are easily trusted.

Which of the following definitions best defines an expatriate manager?

A manager who works outside his or her native country

A manager of great expertise

An ex-manager rehired for advisory purposes

None of these answers

With the heavy focus on trade with China, it may be surprising to discover that Canada is the USA's largest trading partner. Perhaps it is not the amount of trade between the US and China that is such a great concern as much as the growth of the trade, the corresponding imbalances, and China's currency valuations.

The yuan renminbi is the official currency of China. It has been historically fixed and controlled by the Chinese government, but that may be changing. As China becomes a greater global exporter and economic powerhouse, critics are claiming that the currency is being undervalued and manipulated in an attempt to protect domestic markets. There are additional levels of complexity impacting China as the nation must deal not only with the economic competition but also internal political and social pressures. As China continues to loosen capital controls, there is fear that the government may lose control of inflation and interest rates, thereby causing a great deal of labor and social unrest, while negatively impacting China's competitive advantages. There are currently platforms in place to increase the circulation of the yuan, but those platforms are currently limited and severely restricted.

China is a leader in international world trade, a major exporter, and currently holds the largest foreign exchange reserve in the world. The nation has one of the highest GDPs in the world and is increasing its economic power. Is it fair for China to fix its currency by undervaluing it on the market? How does keeping its exchange rate undervalued give it a favorable position in international trade? What about from the viewpoint of consumers?

Why is the Chinese government hesitant to open the yuan to market forces to determine its value (floating exchange rate) inside and outside of China?

We often talk about manufacturing and goods related to trade with China. What information can you find on trade in services between the two countries?

Question

Consider a market with 100 consumers. Each consumer would like to buy at most one unit and is willing to pay up to 10$. There is an incumbent firm that already operates in the market and a potential entrant firm that considers the possibility of entering the market. Both firms do not have any production costs but the entrant has a fixed entry costs of F = 280, that the entrant pays only if he enters the market. Out of the 100 consumers, 60 consumers are loyal to the incumbent and will not buy from any other firm. The remaining 40 consumers are non-loyal and will buy from the firm that charges the lowest price. At equal prices, non-loyal consumers will buy from the entrant. The timing is the following. In the first stage, the incumbent chooses a price, pI. In the second stage, the entrant observes pI and chooses whether to enter the market. If the entrant enters, the entrant pays F = 280 and then chooses a price, pE. If the entrant stays out, the entrant earns 0. Prices are continuous numbers. In the third stage, consumers decide from which firm to buy.

(a) What is the market outcome (entrant’s entry decision, prices and profits of the two firms)?

(b) Solve (a) for the case where F = 200 (instead of F = 280). Explain in words the differences between the two sections.

(c) Suppose again that F = 280. Suppose that the in first stage, the incumbent chooses a price, pI, and cannot change it later on. In the second stage, the entrant chooses whether to enter or not, and if the entrant enters, the entrant chooses a price, pE. However, the entrant cannot observe pI. The entrant knows that the incumbent charged a certain pI in the first stage and cannot change it, but the entrant cannot observe this pI. What are the prices and profits of the incumbent and the entrant? Explain your answer.

(d) Suppose now that there are two markets, A and B. Each market has 100 consumers, out of which 60 consumers are loyal. Consumers in market A are willing to pay up to 10$, while consumers in market B are willing to pay up to 15$. In each market there is an incumbent: incumbent A in market A and incumbent B in market B. There is one entrant that contemplates whether to enter into market A, market B, or non. The entrant does not have any entry costs (F = 0) and can enter only one of the markets. In the first stage, incumbent A chooses a price, pA. In the second stage, incumbent B observes the price of incumbent A and then chooses a price, pB. In the third stage, the entrant observes the two prices and chooses whether to enter one of the markets and if so, the entrant chooses a price. What is the market outcome (entrant’s entry decision, prices and profits of the three firms)?

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in