The shift in the relative bargaining power between MNEs and host governments after the foreign investor incurred the sunk costs of their initial investment is known as:

Question

Quizplus · Accepted Answer

The shift in bargaining power after sunk costs are incurred by the foreign investor is referred to as obsolescing bargain. This is because the host government's bargaining power may increase as the MNE may be less willing to exit the market due to the sunk costs they have already incurred.

The Shift in the Relative Bargaining Power Between MNEs and Host