TY  - JOUR
AU  - Markusen,James R.
AU  - Stähler,Frank
TI  - Endogenous Market Structure and Foreign Market Entry
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15530
PY  - 2009
Y2  - November 2009
UR  - http://www.nber.org/papers/w15530
L1  - http://www.nber.org/papers/w15530.pdf
N1  - Author contact info:
James R. Markusen
Department of Economics
University of Colorado
Boulder, CO 80309-0256
Tel: 303/492-0748
Fax: 303/492-8960
E-Mail: james.markusen@colorado.edu

Frank Staehler
Dept of Economics, University of Würzburg
Sanderring 2, D–97070 Würzburg
Germany
E-Mail: frank.staehler@uniwuerzburg.de
AB  - Models dealing with cross-border acquisitions versus greenfield investment usually assume that the entry of a foreign firm into a market has effects on the outputs of all domestic firms in that market, but exit or entry of local firms is not considered. The purpose of this paper is to re-examine the acquisition versus greenfield versus exporting question under fixed versus free entry assumptions for local firms. Our finding is that greenfield entry and exporting options are more attractive relative to acquisition when the local market structure adjusts to foreign entry through local entry or exit than when it is fixed. The entering foreign firm may do better or worse under free entry versus a fixed market structure depending on its optimal choice under the latter assumption.
ER  -