Multinationals: Too many or too few? - The proximity-concentration Trade-off

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Abstract

The paper builds an analytically tractable model that illustrates the "proximity-concentration trade-off" involved in horizontal multinationals. For low trade costs, firms are single-plant firms, for intermediate costs, some are single-plant firms whereas others are multinationals, for large trade costs, firms are multinationals. Because of the modeling strategy, the model is suited for a welfare analysis of multinationals. It shows that too many firms choose to concentrate their production in only one location. Also, for some transport costs, a reduction in transport costs worsens welfare.
Original languageEnglish
Pages (from-to)203-219
Number of pages17
JournalOpen Economies Review
Volume19
Issue number2
DOIs
Publication statusPublished - 1 Apr 2008

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