Onur A. Koska's research while affiliated with University of Canterbury and other places

Publications (31)

Article
In a differentiated duopoly model of trade and FDI featuring both horizontal and vertical product differentiation, we examine whether globalization and trade policy measures can generate welfare gains by leading firms to change their mode of competition. We show that when a high‐quality foreign variety is manufactured under large frictions due to u...
Article
In the context of a model of international trade through reciprocal dumping with horizontally differentiated goods, we study the endogenous choice of quantities and prices as strategic variables. We show that while a Cournot outcome prevails under conditions of export rivalry, strategic asymmetry under foreign direct investment rivalry may be obser...
Article
Rapid automation in manufacturing has raised pressing questions in public and policy discourse regarding the effects of labor‐eliminating technical progress in an industry. We address the implications of a labor‐eliminating technology adopted in manufacturing for factor price changes, the skilled–unskilled wage gap, and for trade policies intended...
Article
We scrutinize international trade arising from oligopolistic rivalry (reciprocal dumping) in a model where the goods are horizontally differentiated and where otherwise symmetric firms located in different regions adopt asymmetric strategies—one competing in prices and the other competing in quantities. Unidirectional and intra‐industry trade appea...
Article
We consider a standard private value ascending-bid auction and show that subsequent negotiations make a seller worse off. The reason is that the seller’s optimal strategy does not change if she can make a take-it-or-leave-it offer to the highest bidder after the auction. Consequently, her expected revenues do not increase with subsequent negotiatio...
Article
Purpose In a simple reciprocal dumping model of trade, this study scrutinizes the strategic role of trade and commodity taxes as environmental instruments when consumption of an imported product generates pollution. The results suggest that for sufficiently small values of the marginal disutility from pollution, commodity taxes can be preferred ove...
Article
This study employs a differentiated Cournot model with both horizontal and vertical product differentiation. It scrutinizes the implications of frictions over manufacturing high quality (upstream market power) on the endogenous foreign market entry mode and product quality choice. Both high-quality exports and subsidiary sales require high-quality...
Article
Full-text available
The two channels that explain how migration of a household member affects human capital formation of those left-behind are income and family disruption effects. In this study, remittances and migration impacts on human capital formation in Jordan is researched with respect to preferred migrant destinations and to the originating governorates of mig...
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This study shows that when there is multinational competition for foreign acquisition, the strategic use of a consumer welfare argument in regulating foreign market entry leads to a preemptive foreign acquisition. Even under fierce competition, foreign acquisition will emerge as part of a non-cooperative equilibrium (although multinationals would h...
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We scrutinize the scope of auctions for firm acquisitions in the presence of downstream interactions and information externalities. We show that no mechanism exists that allows an investor to acquire a low-cost firm under incomplete information: a separating auction implies adverse selection and relies substantially on commitment to allocation and...
Article
This study scrutinizes the ramifications of the strategic use of a consumer welfare argument in regulating foreign acquisitions and foreign market entry (i) on a multinational’s choice between acquiring a local firm’s existing assets (via negotiations or auctions) and investing in new assets via greenfield entry, or trade, under both complete and i...
Article
This paper models oligopolistic competition among potential multinational firms in an environment of firm heterogeneity, incomplete information on costs, and strategic interactions. We show that foreign direct investment is more likely if it can serve as a signal of productivity in an environment of incomplete information as firms would like to avo...
Article
Since Dixit (1984), it is well accepted that a home country’s best policy is to ban imports in an oligopolistic market if the resulting monopoly has a cost advantage over imports. This note (i) provides a formal proof and (ii) extends this result to symmetric firms. When domestic instruments are available, the optimal policy in a non-cooperative ga...
Article
Except for the famous Dornbusch-Fischer-Samuelson (DFS) models, most general equilibrium models of trade rely on factor price equalization. The DFS models demonstrate the gains from trade without factor price equalization under perfect competition. This paper employs a general equilibrium model of oligopolistic competition which implies distortions...
Chapter
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This chapter analyses the impacts of migration on international trade and product diversity. While Mediterranean Partners and Eastern European Countries constitute the home, the EU 27 constitutes the host countries. Trade analyses cover both total and industry-level bilateral exports and imports, and product diversity is measured by focusing both o...
Article
We study the roles that migration and remittances play in the human capital formation of children in Egypt. Our estimations reveal a significant association between remittances and human capital formation: the higher the probability of receipt of remittances, the higher the probability of school enrollment, and the older the age at which children e...
Article
This paper employs a multi-industry general equilibrium model of oligopolistic competition, free market entry and trade in which capital is used to establish firms and labor is used for production. We show that both absolute and relative endowments matter for the pattern of trade. We demonstrate that market entry to each industry is either too exce...
Article
This paper investigates the optimal acquisition strategy of a foreign …rm under incomplete information. We assume that there are two local target …rms. The foreign …rm does not know either …rms' cost of production, but it has to acquire a local …rm in order to enter the market. There are several strategies the foreign …rm can use such that it can m...
Article
The direct income support policy, by which producer price subsidies in agriculture were replaced, targeted to mitigate potential short-term adverse impacts of the subsidy removal, besides to facilitate the transition to e¢ cient production patterns. The main objective in this study is to analyze the impact of this policy on rural poverty. Intra-reg...
Article
The main objective of this paper is to evaluate the impact of the environmental stringency on trade and the foreign direct investments (FDI) in particular. To do so, both theoretical and empirical investigations are performed. During the empirical investigation, an index of environmental sensitivity performance (IESP) is constructed for the OECD co...
Article
This paper presents a general analysis of two multinational …rms' sequential selection of entry modes to a foreign market. It explicitly shows the inuence of a multinational …rm's decision on a rival multinational …rm's mode of entry and explores possible impacts of market potential, technological capability, trade costs and market entry costs on m...
Article
This paper employs a panel econometric model, and takes the horizontal and vertical FDI approach into account in the same empirical specification to scrutinize the determinants of FDI outflows from the selected EU countries at the industry level. We show that both cost related factors and potential demand are important and they mostly significantly...
Article
This study examines the choice of a multinational …rm between two alternative entry modes, a green…eld investment and a joint venture, under incomplete information. The joint venture partner is selected by an auction, which dis-tinguishes this study from other studies in the literature. A private values auction allows a multinational …rm to increas...
Article
This study focuses on the theory of how multinational firms choose their entry modes between alternative options (i.e., trade, greenfield investment, or acquisition). In a comprehensive model of strategic decision-making with more than one multinational firm, it delineates how a multinational firm's entry mode influences a rival multinational firm'...

Citations

... Foreign market entry modes and the corresponding welfare implications are, however, not considered. Gilbert et al. (2022) have demonstrated that analyzing asymmetric choices in strategic variables in the context of international trade is important. By the same token, Gilbert et al. (2020) show that both trade costs and product quality are crucial explanations for strategic asymmetry between exporting firms and their local rivals. ...
... 5 See, for example, Hallak and Sivadasan (2013), Kugler and Verhoogen (2012), and Manova and Zhang (2012). 6 For discussions of the empirical relevance of modeling an asymmetric upstream industry structure, see Koska (2020). 7 High-quality inputs produced by the upstream monopoly are highly customized according to the needs of the downstream exporter, whose exports to home shall be regarded as country specific: its production for another country (other than home) do not affect the price of this specific input. ...
... Remittances not only increase the attendance of students at educational institutions, but also reduce the dropout rate among students. They have been found to be responsible for increasing girls' education in different parts of the world where religious rules are more strictly followed, such as in countries like Jordan (Cagatay, Mert, Koska & Artal-Tur, 2019). ...
... Historically, the theory of FDI is deeply rooted in the theory of industrial organization (see Antràs and Yeaple (2014) for a recent survey). The contribution of Onur Koska (2019) to this special issue can be seen in the context of this literature. Koska analyzes how government regulation in the form of a minimum output requirement affects foreign companies' choice of market entry -in particular, the choice between acquiring a domestic firm and serving the domestic market through exports. ...
... Alternatively, Koska et al. (2018a) show that if there is ex ante incomplete cost information, and if FDI can serve as a signal of high productivity, then greenfield FDI can be optimal even when trade and transport costs are zero. Similarly, Koska (2019) finds that also FDI through acquisition of a local firm can be the optimal entry mode in the times of complete trade liberalization. 4 In particular, it can be argued that foreign acquisitions can be more profitable than greenfield entry, especially when the cost of shared ownership is relatively low, and/or when foreign acquisitions generate significant synergies (reducing production costs) among firms (e.g., see Raff et al., 2006;2009;2012). ...
... Alternatively, in a trade model with monopolistic competition and firm heterogeneity, Helpman et al. (2004) show that there is sorting by productivity thresholds determining firms' foreign market entry modes. By the same token, in a simple linear Cournot model with constant marginal production costs and firm heterogeneity, it is straightforward to show that (e.g., see Koska et al. 2018a), unless there is prohibitively large fixed investment cost, denoted F, (so FDI is not profitable for any firm), or unless there is negligibly small F (so FDI is more profitable than trade for all firms), for any F, there is a corresponding threshold cost type, denoted λ (F), such that firms with marginal cost c * < λ (F) will prefer FDI over trade, and those with c * > λ (F) will prefer trade over FDI. 2 A consumer welfare argument that can be considered the common practice in most countries as documented by Breinlich et al. (2017) challenges mergers and acquisitions on the basis whether they lessen competition and adversely affect consumers. ...
... Moner-Colonques, Orts, and Sempere-Monerris (2007) study an oligopolistic market with asymmetric information where the host firms have superior information about local demand; firms undertake FDI to obtain more accurate demand information. The recent contribution by Koska, Long, and Stähler (2018) considers instead a setting with private cost information hence capturing firm heterogeneity; the signaling effect of FDI provides firms with an additional incentive to undertake FDI. In addition to the wellknown trade-off between a technology with lower marginal costs (FDI) and a technology with lower fixed costs (exports), these models draw attention to elements that affect the variability in profits for either entry strategy. ...
... An implicit assumption of the model is that the countries are allowed to adopt only a single policy instrument at any given time, such that they either impose an import tari or a non-discriminatory commodity tax. The reason is that in case if they are allowed to use both import tari s and commodity taxes at the same time, then the optimal solution is such that both countries impose positive import tari s above the prohibitive rate so as to ensure there is no trade, and they subsidize local consumption (impose negative commodity taxes) such that the first-best is attained with no further insight; see Koska and Stähler (2016) for details. ...
... Many studies have established the positive impacts remittances have economically at both the individual-and state-level, and some studies have also shown that remittances improve various human development indicators in receiving households, including children's education (Koska et al. 2013;Bredl 2011; Amuedo-Dorantes and Pozo 2010; Go 2009) and health outcomes (Azizi 2018). Additionally, remittances may be used to make up for de ciencies in public goods provision, such as drainage and sanitation (Adida and Girod 2011). ...
... water pollution (BOD); fertilizer; WEF's environmental sustainability index (Wagner et al. (2007)); index of environmental sensitivity performance (Cagatay et al.(2006), Mihci et al. (2005)); number of deaths related to pollution; number of environmental NGOs, number of iso 14001 licences). ...