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The Choice Between Foreign Direct Investment and Export with Industry Competition and Marginal Cost

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Book cover Innovative Mobile and Internet Services in Ubiquitous Computing (IMIS 2020)

Part of the book series: Advances in Intelligent Systems and Computing ((AISC,volume 1195))

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Abstract

This paper uses real option theory to explicitly derive an optimal foreign investment rule. In the setting we characterize the investment decisions and give rise to a theoretic analysis of optimal foreign direct investment timing under exchange rate uncertainty with industry competition and firm marginal cost. This paper demonstrates the impact on the relevant economic variables and infer empirical implications to results. The model is extended to include an exit option and externalities, which have implications for divesting FDI and policy. This enriches the literature and captures model policy driven FDI as a dynamic process.

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Author information

Authors and Affiliations

  1. Department of Finance, Asia University, No. 500, LiuFeng Road, Wufeng District, Taichung City, Taiwan

    Chun-Ping Chang, Yung-Shun Tsai, Shyh-Weir Tzang & Zolzaya Batjargal

Authors
  1. Chun-Ping Chang
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  2. Yung-Shun Tsai
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  3. Shyh-Weir Tzang
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  4. Zolzaya Batjargal
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Corresponding author

Correspondence to Shyh-Weir Tzang .

Editor information

Editors and Affiliations

  1. Department of Information and Communication Engineering, Faculty of Information Engineering, Fukuoka Institute of Technology, Fukuoka, Japan

    Leonard Barolli

  2. Institute of Information Technology, Lodz University of Technology, Łódź, Poland

    Aneta Poniszewska-Maranda

  3. Department of Information and Communications Engineering, Myongji University, Yongin, Seoul, Korea (Republic of)

    Hyunhee Park

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Chang, CP., Tsai, YS., Tzang, SW., Batjargal, Z. (2021). The Choice Between Foreign Direct Investment and Export with Industry Competition and Marginal Cost. In: Barolli, L., Poniszewska-Maranda, A., Park, H. (eds) Innovative Mobile and Internet Services in Ubiquitous Computing . IMIS 2020. Advances in Intelligent Systems and Computing, vol 1195. Springer, Cham. https://doi.org/10.1007/978-3-030-50399-4_49

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