Investor-State Dispute Settlement and Multinational Firm Behavior

24 Pages Posted: 15 Sep 2020

See all articles by Guttorm Schjelderup

Guttorm Schjelderup

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

Frank Stähler

affiliation not provided to SSRN

Multiple version iconThere are 3 versions of this paper

Date Written: 2020

Abstract

This paper shows that Investor-State Dispute Settlements (ISDS) makes multinational firms more aggressive by increasing cost-reducing investments with the aim to enlarge the potential compensation an ISDS provision may offer. While a larger investment reduces the market distortion, it will also make potential compensations larger. Consequently, potential compensations to a foreign investor do not imply a zero-sum game. ISDS may decrease domestic welfare, in particular if the investment leads to the establishment of an export platform, and we find that even global welfare may decline.

Keywords: investor-state dispute settlement, multinational enterprises, foreign direct investment, TTIP, TPP

JEL Classification: F210, F230, F530, F550

Suggested Citation

Schjelderup, Guttorm and Stähler, Frank, Investor-State Dispute Settlement and Multinational Firm Behavior (2020). Available at SSRN: https://ssrn.com/abstract=3692921 or http://dx.doi.org/10.2139/ssrn.3692921

Guttorm Schjelderup (Contact Author)

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

Helleveien 30
Bergen, NO-5045
Norway

Frank Stähler

affiliation not provided to SSRN

No Address Available

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