A Subsidiary Operating in a Foreign Country May Have Important

question 49

True/False

A subsidiary operating in a foreign country may have important tax, tariff, and other operating advantages over a licensing agreement or a joint venture.

---

Definitions:

X-inefficiency

The inefficiency that occurs in a firm due to a lack of competitive pressure, leading to higher costs than necessary.

Pure Competition

A market structure characterized by a large number of small firms, homogenous products, and free entry and exit, leading to price-taking behavior.

Pure Monopoly

A market scenario in which one company monopolizes the entire market for a specific product or service, lacking any significant alternatives.

Price Discrimination

A pricing strategy where identical or substantially similar goods or services are sold at different prices by the same provider in different markets.