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Unformatted text preview: e other hand, firm size
and multinationality do not necessarily provide this bargaining advantage
[Fagre and Wells 19821. The primary explanationfor this difference is that
while a host government may beable to find alternative sources of capital,
it may not easily find alternative sources of technology. This implies that
desirable technology can command an unusually high degree
and bargaining position even in countries that are characterized by higher
investment risks r i n g 19881.
In addition, risk-reducing considerations may push irms that have proprief
tary products or technology to choose higher control modes. Such modes
allow fm to modify their investments in such a way that the assets they
place in the foreign country are less profitable to the host government in
case they are expropriated [Eaton and Gersovitz 19831. Without control,
these fums face an omnipresent threat that host govenunents will change
their policies at a future date infavor of local f i i s . Thus:...
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This document was uploaded on 03/22/2014.
- Summer '14