Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73310
Authors: 
Egger, Peter
Pfaffermayr, Michael
Year of Publication: 
2000
Series/Report no.: 
Working Paper, Department of Economics, Johannes Kepler University of Linz 0013
Abstract: 
The overwhelming importance of multinational activities as well as the coexistence of exporters and multinationals within the developed countries demand for theoretical models which provide a convincing explanation of simultaneous two-way trade and horizontal multinational activities. We present a model with three factors of production to disentangle the twofold importance of headquarters for their affiliates into a know-how and a capital serving part (FDI). Multinationals trade-off the incentives for a high proximity to the market and a concentraion of production facilities. We simulate the model to derive predictions about the impact of trade costs, plant set-up costs, relative country size and factor endowments on the factor prices of labor, human and physical capital on the one hand and three main output variables, exports, multination sales and FDI, on the other. We find that the effects are not uniform for multinational sales and FDI. Hence, one shuld be careful with interpreting the simulation results of previous work for sales as simply holding for FDI as well.
Subjects: 
multinationals
new trade theory
endogenous location
JEL: 
F12
F13
Document Type: 
Working Paper

Files in This Item:
File
Size
295.31 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.