Product Market Cooperation, Foreign Direct Investment and Consumer Welfare

Arijit Mukherjee; Uday Bhanu Sinha

doi:10.1007/s11151-023-09925-x

Product Market Cooperation, Foreign Direct Investment and Consumer Welfare

Arijit Mukherjee^*
, Uday Bhanu Sinha

^*Corresponding author for this work

Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review

1 Citation (Scopus)

3 Downloads (CityUHK Scholars)

Abstract

Cooperation 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. © The Author(s) 2023.

Original language	English
Pages (from-to)	315-326
Journal	Review of Industrial Organization
Volume	64
Issue number	2
Online published	1 Nov 2023
DOIs	https://doi.org/10.1007/s11151-023-09925-x
Publication status	Published - Mar 2024
Externally published	Yes

Research Keywords

Consumer surplus
Cooperation
Foreign direct investment
Welfare

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This full text is made available under CC-BY 4.0. https://creativecommons.org/licenses/by/4.0/

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title = "Product Market Cooperation, Foreign Direct Investment and Consumer Welfare",

abstract = "Cooperation 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. {\textcopyright} The Author(s) 2023.",

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T1 - Product Market Cooperation, Foreign Direct Investment and Consumer Welfare

AU - Mukherjee, Arijit

AU - Sinha, Uday Bhanu

PY - 2024/3

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N2 - Cooperation 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. © The Author(s) 2023.

AB - Cooperation 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. © The Author(s) 2023.

KW - Consumer surplus

KW - Cooperation

KW - Foreign direct investment

KW - Welfare

UR - https://www.scopus.com/pages/publications/85175377769

UR - https://www.scopus.com/record/pubmetrics.uri?eid=2-s2.0-85175377769&origin=recordpage

U2 - 10.1007/s11151-023-09925-x

DO - 10.1007/s11151-023-09925-x

M3 - RGC 21 - Publication in refereed journal

SN - 0889-938X

VL - 64

SP - 315

EP - 326

JO - Review of Industrial Organization

JF - Review of Industrial Organization

IS - 2

ER -

Product Market Cooperation, Foreign Direct Investment and Consumer Welfare

Abstract

Research Keywords

Publisher's Copyright Statement

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