Investor State Dispute Settlement and Multinational Firm Behavior

18 Pages Posted: 8 Apr 2017

See all articles by Guttorm Schjelderup

Guttorm Schjelderup

Norwegian School of Economics (NHH) - Department of Business and Management Science

Frank Stähler

University of Tuebingen - Department of Economics; University of Adelaide - School of Economics; CESifo (Center for Economic Studies and Ifo Institute)

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Date Written: January 27, 2017

Abstract

Investor-state dispute settlements (ISDS) were supposed to become an integral part of multilateral trade and investment agreements although the partner countries of these deals do not suffer from substantial institutional weakness. This paper shows why multinational firms lobby for ISDS also in this environment beyond the potential compensation an ISDS provision may offer. ISDS makes them more aggressive by increasing cost-reducing investment. Therefore, potential compensations to a foreign investor do not imply a zero-sum game, and competition with a domestic firm does not necessarily help but may imply even more excessive investment.

Keywords: Investor-State Dispute Settlement, Mulitnational Enterprises, Foreign Direct Investment, TTIP, TPP

JEL Classification: F21, F23, F53, F55

Suggested Citation

Schjelderup, Guttorm and Stähler, Frank, Investor State Dispute Settlement and Multinational Firm Behavior (January 27, 2017). NHH Dept. of Business and Management Science Discussion Paper No. 2017/4, Available at SSRN: https://ssrn.com/abstract=2948306 or http://dx.doi.org/10.2139/ssrn.2948306

Guttorm Schjelderup (Contact Author)

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
Bergen, NO-5045
Norway

Frank Stähler

University of Tuebingen - Department of Economics ( email )

Mohlstrasse 36
D-72074 Tuebingen, 72074
Germany

HOME PAGE: http://www.frank-staehler.de

University of Adelaide - School of Economics ( email )

Adelaide SA, 5005
Australia

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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