Does North–South Integration Affect Multinational Firms’ Strategies?

Sylvie Montout and Habib Zitouna

Review of International Economics, 2005, vol. 13, issue 3, 485-500

Abstract: This paper aims to develop a theoretical model that shows how a firm's decision to make a foreign direct investment is influenced by a North–South regional economic integration. Our results suggest that tariff‐jumping and export‐platform strategies depend on a tradeoff between variable trade costs and fixed costs, in addition to wage differences. Furthermore, insiders may affect the strategic location of outsiders by dampening the market accessibility advantages induced by the trade liberalization process, which results in an eviction of the outsiders from the area. This effect, however, depends heavily on the level of fixed costs. Indeed, a decrease in the costs of implanting in the low‐wage country gives the insiders a first‐mover advantage that allows them to later evict their competitors.

Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
https://doi.org/10.1111/j.1467-9396.2005.00519.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:reviec:v:13:y:2005:i:3:p:485-500

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0965-7576

Access Statistics for this article

Review of International Economics is currently edited by E. Kwan Choi

More articles in Review of International Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().