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Title:Foreign market entry under incomplete contracts PDF Logo
Authors:Seidel, Tobias
Issue Date:2010
Series/Report no.:CESifo working paper: Trade Policy 3248
Abstract:I show in this paper that incomplete contracts affect a firm's decision about serving foreign customers through exports or local sales from an affiliated plant. When contracts between two agents within a firm are too costly to write, the share of multinational firms may be higher or lower compared to a world without contractual frictions. Incomplete contracts also provide a novel explanation for why horizontal multinational activity may increase when trade costs fall - a result that is at odds with the proximity-concentration trade-off.
Subjects:multinational firms
exports
incomplete contracts
JEL:F12
F15
F23
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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