We argue that a host government treats foreign firms better if those foreign firms have fewer replacements. We identify a key structural determinant of replaceability: the startup costs that foreign firms must incur to begin production. Since the host government can only take from foreign firms that actually produce in its market, it must treat foreign firms better when their startup costs are high, lest the government drive all foreign firms out. Our theoretical model applies contemporary trade theory to foreign direct investment and provides insights about the understudied relationship between foreign and domestic firms. Most importantly, it endogenizes market entry and exit, establishing the importance of entry despite scholars' long-time focus on exit. Our analysis uses cross-national firm-level data on taxes and production outcomes, and we provide a new industry-level measure of government treatment of foreign firms.

中文翻译：

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做生意的代价：为什么可替代的外国公司得到更糟糕的政府待遇

我们认为，如果外国公司的替代者较少，东道国政府会更好地对待外国公司。我们确定了可替代性的一个关键结构决定因素：外国公司开始生产必须承担的启动成本。由于东道国政府只能从在其市场上实际生产的外国公司那里拿走，所以当外国公司的启动成本很高时，它必须更好地对待外国公司，以免政府将所有外国公司赶出去。我们的理论模型将当代贸易理论应用于外国直接投资，并提供有关国内外公司之间研究不足的关系的见解。最重要的是，它内生了市场进入和退出，尽管学者们长期关注退出，但确立了进入的重要性。我们的分析使用了跨国公司层面的税收和生产成果数据，