International Expansion, Diversification and Regulated Firm Nonmarket Strategy

Abstract : Previous studies have shown that regulated firms diversify for reasons that are different than for unregulated firms. We explore some of these differences by providing a theoretical model that starts by considering the firm-regulator relationship as an incomplete information issue, in which a regulated incumbent has knowledge that the regulator does not have, but the firm cannot convey hard information about this knowledge. The incumbent faces both market and nonmarket competition from a new entrant. In that context, we show that when the firm faces tough nonmarket competition domestically, going abroad can create a mechanism that makes information transmission to the regulator more credible. International expansion can thus be a way to solve domestic nonmarket issues in addition to being a catalyst for growth
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Contributor : Antoine Haldemann <>
Submitted on : Wednesday, August 21, 2013 - 11:16:01 AM
Last modification on : Thursday, January 11, 2018 - 6:19:31 AM

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Santiago Urbiztondo, Jean-Philippe Bonardi, Bertrand Quélin. International Expansion, Diversification and Regulated Firm Nonmarket Strategy. Managerial and Decision Economics, Wiley, 2013, 34 (6), pp.379-396. ⟨10.1002/mde.2598⟩. ⟨hal-00852603⟩

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