This paper considers an infinite period model to analyse the impact of future liberalisation policy on the quality of international technology transfer by a Multinational Corporation (MNC). The domestic government policy, either protection or liberalisation, is uncertain. It shows a non-monotonic relationship between the quality of the technology transferred and the belief about the future liberalisation policy under certain parameter configurations. The imitation of foreign technology by a host firm is treated as a choice variable and is shown to occur in equilibrium. As a result, it is found that the MNC and the host firm may compete with the same technology in the domestic market. This approach thus provides an endogenous theory of evolution of market structure.