Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/77460
Authors: 
Bombarda, Pamela
Year of Publication: 
2007
Series/Report no.: 
HEI Working Paper 24/2007
Abstract: 
This paper is a simple extension of the standard FDI model of Markusen and Horstmann (1992). This latter predicts firms would supply nearby markets with exports but far away markets with FDI. Nevertheless, this does not match the spatial pattern in the data for many home nations and industries. We propose a model with heterogeneous firms where the spatial pattern of FDI depends upon distance-linked communications costs as well as trade costs; the resulting model lines up both with the aggregate knowledge-capital model evidence and the firm-level evidence of Helpman-Melitz-Yeaple, while still allowing individual firms to engage in FDI in nearby markets while supplying distant markets via exports.
Subjects: 
intermediate goods
multinational firms
communication costs
JEL: 
F12
F23
Document Type: 
Working Paper

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