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Strategic Investments and the Development of Multinationals
Abstract
A model of multinational behavior is presented in which either the existence or absence of multinationals can be a Nash equilibrium outcome. The key determinant is the relationship between plant scale economies (a force for geographic centralization) and multiplant economies plus transport costs (leading to multinationality). The model predicts that multinational enterprise production arises when firm-specific and transportation costs are large relative to plant scale economies. The latter are both a technological and a strategic variable in the entry decision. Copyright 1987 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
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Citations
Cited by
Estimating the Knowledge-Capital Model of the Multinational Enterprise: Comment
Blonigen, B. A., Davies, R. B., & Head, K. (2003) · American Economic Review · doi:10.1257/000282803322157214 · Cited by 867
Estimating The Knowledge-Capital Model of the Multinational Enterprise
Carr, D. L., Markusen, J. R., & Maskus, K. E. (2001) · American Economic Review · doi:10.1257/aer.91.3.693 · Cited by 828
Self-citationTrade, Foreign Direct Investment, and International Technology Transfer: A Survey
Saggi, K. (2002) · The World Bank Research Observer · doi:10.1093/wbro/17.2.191 · Cited by 732
The quality of institutions and foreign direct investment
DAUDE, C., & STEIN, E. (2007) · Economics & Politics · doi:10.1111/j.1468-0343.2007.00318.x · Cited by 670
Yeaple, S. R. (2003) · Journal of International Economics · doi:10.1016/s0022-1996(02)00051-x · Cited by 540
Metadata
- Authors
- Horstmann, I. J., & Markusen, J. R.
- Venue
- International Economic Review
- Publisher
- JSTOR
- Published
- 1987-02
- Volume
- 28
- Issue
- 1
- Pages
- 109
- ISSN
- 0020-6598 (ISSN-L)
- OpenAlex
- W2170582463
- Cited by
- 349
- References
- 0
- FWCI
- 15.76
- Type
- journal article
- Language
- en
- Open access
- closed
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Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
