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http://hdl.handle.net/10419/22088
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| Title: | | A Structural Model of Export versus Affiliates Production  |
| Authors: | | Kleinert, Jörn Toubal, Farid |
| Issue Date: | | 2005 |
| Series/Report no.: | | Tübinger Diskussionsbeiträge 288 |
| Abstract: | | We derive and estimate an econometric model of export versus foreign production using firm-level data on foreign activities of German multinationals. Proximity-concentration theory which we derive our model from shows that firms face a trade-off between concentrating their production at home to save on plant set-up costs and producing abroad to save on distance costs. Firms facing this trade-off choose between export and foreign production according to their expected profits. The model is brought to the data using a pooled-probit analysis over the period 1996-1999. We find support for the proximity-concentration trade-off. In particular, market size and distance affect positively the probability of foreign production whereas fixed costs have a negative impact on the decision to engage in FDI. |
| Subjects: | | Multinational firms trade |
| JEL: | | F12 F23 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Tübinger Diskussionsbeiträge, Universität Tübingen
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