Foreign direct investment (FDI) is a heterogeneous flow of funds, composed of both acquisition (cross-border mergers and acquisitions, M&A) and Greenfield investment (GF). Since the dilemma of a firm between GF and M&A is similar to the one between cooperation and defection in Prisoner’s Dilemma (PD), we used PD for modeling FDI. We discuss the conditions for the firms to take GF (cooperation) option by equilibrium analysis
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Foreign direct investment (FDI) is a heterogeneous flow of funds, composed of both acquisition (cross-border mergers and acquisitions, M&A) and Greenfield investment (GF). Since the dilemma of a firm between GF and M&A is similar to the one between cooperation and defection in Prisoner’s Dilemma (PD), we used PD for modeling FDI. We discuss the conditions for the firms to take GF (cooperation) option by equilibrium analysis
