Reports
Discussion Papers
No.469 Competition between Firms in Developing and Developed Countries
June 2014
ABSTRACT
We
analyze
competition
in
emerging
markets
between
firms
in
developing
and
developed
countries
from
the
viewpoint
of
the
boundaries
of
the
firm.
Although
indigenous
firms
generally
face
a
disadvantage
in
technology
compared
with
foreign
firms,
they
have
an
advantage
in
marketing
as
local
firms.
Moreover,
they
have
opportunities
to
leave
weaker
fields
to
independent
specialized
firms
and
use
lower
wages.
On
the
other
hand,
foreign
firms
also
have
their
own
advantages
and
disadvantages
for
growth.
Therefore,
entry
conditions
for
indigenous
firms
can
vary
greatly
depending
on
the
situation.
We
classify
these
conditions
into
eight
cases
by
developing
a
model
and
showing
each
boundary
choice
for
indigenous
firms.
Keywords:
the
boundaries
of
the
firm;
indigenous
firms;
foreign
firms;
developing
countries;
developed
countries
JEL
classification:
F23,
L22,
O12
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