Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/149277
Authors: 
Milliou, Chrysovalantou
Sandonís, Joel
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 6190
Abstract: 
According to conventional wisdom, multinational firms undertake vertical FDI in order to take advantage of cross-border factor cost differences and source the inputs from abroad at better terms. Recent empirical findings though document that this is not always the case. We provide theoretical support to the latter by demonstrating that when there is transfer of intangible assets between a multinational’s vertically related production plants, its parent firm can engage in vertical FDI in order to improve its cross-threat and its input sourcing terms domestically and not abroad as well as in order to exploit its intangible assets in another country. We also investigate the effects of trade liberalization and the welfare consequences of vertical FDI.
Subjects: 
international trade
vertical FDI
inputs
trade liberalization
intangible assets
two-part tariffs
JEL: 
L13
L22
L23
F12
F23
Document Type: 
Working Paper

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