Three essays on international trade

Chapter 1 explores the economic meaning of foreign direct investment and antidumping which are regarded as two pillars of modern international economics. Literature on foreign direct investment inevitably deals with issues related to barriers in host countries because those barriers can have a great impact on an investing firm's behavior. In contrast, as the general tariff loses its attractiveness as an effective tool of a trade barrier, an increasing number of countries have turned their attention to administrative protection measures, which is represented by antidumping policy. Against this background, this paper investigates the theoretical and empirical literature on these issues, with suggesting possible frontiers to be explored in the future.; Chapter 2 examines a multinational's optimal entry into foreign markets that differ in market size, FDI fixed costs, tariffs and transport costs to illuminate the multinational's decision to engage in FDI, acquisition, exports or no entry. Our results highlight why large countries attract relatively more acquisition investment, while intermediate sized countries may be served predominantly through trade, even in the presence of high tariffs. We also explore the welfare implications of tariff reductions for both the local firm and the multinational and investigate political motives to impose endogenous tariffs to influence not only the welfare of the local firm, but also the entry mode of the multinational.; Chapter 3 examines the domestic and the foreign firms' strategic pricing behavior under domestic government's administrative protection regime. Specifically the firms' incentives, to alter the price of their goods to induce a favorable protection response on the part of the government, is explored. The behavior of the domestic and the foreign firm depends on the weight the government places on firm welfare relative to consumer welfare. In addition to that, the foreign firm behaves more strategically by adjusting its behavior according to the behavioral stance of its rival. We characterize a variety of equilibria that emerge depending on the demand for and the substitutability between the domestic and foreign goods, and show that when we consider the firms' strategic behavior, the administrative protection measures will never be set optimally.