Optimal Integration Strategies for the Multinational Firm

Gene Grossman (), Elhanan Helpman and Adam Szeidl

No 10189, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine integration strategies of multinational firms that face a rich array of choices of international organization. Each firm in an industry must provide headquarter services from its home country, produce intermediate inputs, and assemble the intermediate goods into final products. Both production of intermediate goods and assembly can be performed at home, in another Northern' country, in the low-wage South,' or in several of these locations. We study the equilibrium choices of firms that differ in productivity (and thus size), focusing on the role of industry characteristics such as the fixed costs of foreign subsidiaries, the cost of transporting intermediate and final goods, and the share of the consumer market that resides in the South in determining optimal integration strategies.

JEL-codes: F23 F12 (search for similar items in EconPapers)
Date: Written
Note: ITI
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Related works:
Working Paper: Optimal Integration Strategies for the Multinational Firm (2003)
Working Paper: Optimal Integration Strategies for the Multinational Firm (2003)
Working Paper: Optimal Integration: Strategies for the Multinational Firm (2004)
Journal Article: Optimal integration strategies for the multinational firm (2006)
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