A Theoretical Analysis on Procurement of Parts and Oligopolistic Competiton of Multinatioonal firms under Foreign Exchange and Oversea Production Cost Uncertainty

2017 Fiscal Year Final Research Report

• Project/Area Number: 15K03492
• Research Category: Grant-in-Aid for Scientific Research (C)
• Allocation Type: Multi-year Fund
• Section: 一般
• Research Field: Economic policy
• Research Institution: Kwansei Gakuin University
• Principal Investigator: SHINKAI Tetsuya 関西学院大学, 経済学部, 教授 (40206313)
• Co-Investigator(Kenkyū-buntansha): 大川 隆夫 立命館大学, 経済学部, 教授 (10258494) ; 岡村 誠 広島大学, 社会科学研究科, 名誉教授 (30177084)
• Project Period (FY): 2015-04-01 – 2018-03-31
• Keywords: 多国籍企業 / 寡占市場競争 / 現地調達要求規制 / 外国為替リスク / 直接投資 / 利益送金 / 現地生産費用リスク

Outline of Final Research Achievements

In this study, we investigate the changes in local content requirement (LCR) and exchange rate volatility on an international oligopolistic market in a foreign country that accepts affiliate firms through FDI. We derive a Cournot equilibrium of the oligopolistic foreign market, in which affiliate firms compete with the foreign firms under foreign exchange rate risk for when the number of affiliates is either exogenous or endogenous. In the former, we show the affiliates expand their outputs and the ex-post expected profits of the affiliates decrease but their ex-ante certainty equivalent of expected profits increases with the volatility of the exchange rate when the relative risk averse is not so strong at equilibrium. In the latter, we show LCR tightening always accelerates the exit of the affiliates from the market and if the relative risk averse of the parent firms is not so strong, the entry of affiliates onto the foreign market can be urged as the risk of exchange rate increases.

Free Research Field

産業組織論