The price can be influenced by factors: | Ability to capture information | |
Endogenou | When the MNE is able to invest in the host environment to discover the trend of market demand and supply. | WOS and JV have more ability to capture information due to ownership advantages. To calculate the option value, we will introduce the parameter B that represents the capture of additional benefits from reduced uncertainty. |
Exogenous | The market price of a product is often influenced by local government regulations and interventions. | The smaller the B parameter, the more the uncertainty is exogenous, and the larger it is, the more the uncertainty is endogenous. |