Multinational Corporations’ Entry Modes And Their Effects On The Market Structure Of Host Country

Economic globalization is an important trend of the world’s economic development, and multinational corporations (MNCs) are the most important participants in the process of economic globalization. In this context, foreign direct investment (FDI) develops rapidly and has an increasingly important influence on all countries’ economic growth, technological progress and market structural adjustment. There are two main entry modes for MNCs to undertake FDI, one is greenfield investment and the other is cross-border mergers and acquisitions (cross-border M&As). There are different effects of MNCs’two entry modes on host country’s market structure and technology transfer, but existing theories about FDI barely make a distinction between greenfield investment and cross-border M&As. Since the reform and opening up, China has been expanding the scale of FDI, how to attract and utilize FDI plays a crucial role in the improvement of China’s market structure. Therefore, research on MNCs’two main entry modes and their effects on host country’s market structure not only has theoretical value, but also has important practical significance.This paper will combine FDI theory with industrial organization theory, and use a combination of theoretical and practical analysis method. First, the paper reveals the difference between MNCs’main entry mode into the world and China, then studies MNCs’entry modes to explain this difference with the theoretical analysis method. Afterwards, the paper studies the effects of MNCs’entry modes on host country’s market structure in detail with the theoretical analysis method, and does some research on the different effects of greenfield investment and cross-border M&As on the market structure of China’s high-tech industry with the practical analysis method. Finally, the paper reaches conclusions based on the preceding analysis, and brings forward the policy recommendations.Compared with the existing literature, this paper presents exploratory research in the following areas. First, the paper builds a game theory model to study MNCs’entry modes with the theoretical analysis method, therefore provides a theoretical basis for policy interventions. Second, the paper studies the effects of MNCs’ entry modes on the market structure of host country in the early and advanced stages from four aspects, including market concentration, entry and exit barriers, product differentiation and economies of scale. Third, the paper selects the high-tech industry as a representative to study the different effects of MNCs’entry modes on China’s market structure in both short-term and long-term...