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Bargaining Models: what is the "Obsolescing Bargain"? Bargaining Models: what are the factors that would tend...

Bargaining Models: what is the "Obsolescing Bargain"?

Bargaining Models: what are the factors that would tend to give a TNE more bargaining power over a host country government in negotiating the terms for its investment?

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Answer #1

Answering the first question as per Chegg Guidelines:

1. Obsolescing Bargain model is basically an interaction model which happens between an MNE and government of the host country, where the MNE intends to do business. Initially the bargain is in favor of the MNE but with time, the inclination of the bargain shifts to favoring the government. An example of this is: To attract a MNE to do business in its country, the government may offer land at a minimal lease. The bargain is favouing the MNE. However with time, the cost of the lease increases and the bargain shifts in favor of the government.

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