Question

The monopolistic advantage theory states that:

A. a firm that has a monopoly has a major advantage in overseas investment.

B. FDI is made by firms in oligopolistic industries possessing technical advantages over local companies.

C. a firm that has a monopoly domestically will have no competition making overseas investments.

D. the firm making the overseas investment first has a monopolistic advantage.

E. none of the above.

Answer 1

The monopolistic advantage theory relates to firms in oligopolistic industries that have technical advantages, which helps them in foreign direct investment.

Step-by-step explanation:

The monopolistic advantage theory suggests that firms that have specific advantages—like advanced technology or a unique product—can overcome the usual disadvantages of operating in a foreign environment, like unfamiliarity with local markets or cultures. Applying this to the options provided, the correct answer that aligns with the monopolistic advantage theory is: B. FDI is made by firms in oligopolistic industries possessing technical advantages over local companies. This is because these firms have unique assets or capabilities that give them an edge over the competition, allowing for successful foreign direct investment (FDI).