GEP Research Paper 03/18
On Foreign Market Entry Under Uncertainty
Paul A. de Hek and Arijit Mukherjee
Abstract
In an infinite horizon framework with demand uncertainty, we explain a foreign firm's rationale for doing export, joint venture or opening a fully owned foreign subsidiary. We examine the possibility of share renegotiation in a JV over time and explain how this possibility affects the entry decision of a foreign firm. We also show that if the benefit from information acquisition under export is sufficiently strong then a foreign firm may be willing to do export initially even if export is a non-profitable option.
Issued in June 2003.
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