Question

The monopolistic advantage theory suggests that firms in oligopolistic industries are likely to _______________ foreign direct investment when they have technical and other advantages over indigenous firms.

Answer 1

Answer:

Group of choices:

A. increase

B. reduce

C. ignore

D. not change

E. none of the above

The correct answer is A. Increase.

Explanation:

The company has, within the national sphere, a monopolistic advantage that should be extended abroad.

Monopolistic advantage theory can take many forms:

* Ability to control a specific product differentiated, because other companies do not have the know-how.

* Exclusive control over raw material or other necessary inputs / components.

* Low unit cost of production due to the large volume of it.

Limitations: Do not replenish because production abroad is the preferred way to exploit these advantages and not through exports or licenses.

Answer 2

Answer:

Increase

Explanation:

The reason is that the investors invests on those projects that generate higher profits and has lower risks. So if the organization that has uniqueness in technical and other advantages over indigenous firms then the foreign direct investment would increase.