An equilibrium analysis of the revenuemaximizing multinational enterprise

Songhua Hu ()
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Songhua Hu: Lingnan College, Sun Yat-sen University, Guangzhou 510275, China

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2008, vol. 3, issue 3, 482-495

Abstract: Departing from the traditional profit-maximization assumption underlying the theory of the multinational enterprises (MNEs), this paper proposes a model of the revenue-maximizing MNE subject to the profit constraint. The nonlinear programming techniques are used for the equilibrium analysis of the MNE¡¯s decision-making. A set of optimal conditions is derived regarding the quantity of output, volume of intra-firm trade, allocation of multinational production, as well as transfer prices in both exogenous and endogenous cases. Under the context, a comparison of the behavioral differences is made between the revenue-maximizing MNE and the profit-maximizing MNE.

Keywords: multinational enterprise; revenue maximization; behavioral model; constrained sales-maximization (search for similar items in EconPapers)
JEL-codes: F23 (search for similar items in EconPapers)
Date: 2008
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