What is meant by an obsolescing bargain?

The correct choice highlights the essence of the term "obsolescing bargain," which refers to the situation where the terms of a deal or contract are renegotiated after an initial investment has been made, and the relative bargaining power of the parties has changed. In this context, the party that invested initially may find themselves in a weaker position as time progresses, making them more vulnerable to demands from the other party. This can occur, for example, when a foreign company invests in a host country's infrastructure; once the investment is made, the host country might leverage the situation to negotiate more favorable terms for themselves, knowing that the investor has more to lose if they walk away.

This concept is important in international business as it reflects the dynamic nature of negotiations and the impact of investments on bargaining power. Understanding that deals can become less favorable over time due to shifts in power dynamics is crucial for companies engaging in long-term investments, especially in foreign markets.

The other options present different concepts that do not accurately represent the idea of an obsolescing bargain. For instance, a deal becoming more favorable over time is not consistent with the nature of an obsolescing bargain, which typically leads to a weaker position for the original investor. Similarly, a permanently