MULTINATIONALS, MULTI-PLANT ECONOMIES, AND THE GAINS FROM TRADE

James Markusen

Chapter 1 in Broadening Trade Theory:Incorporating Market Realities into Traditional Models, 2021, pp 3-24 from World Scientific Publishing Co. Pte. Ltd.

Abstract: A general equilibrium model of a multinational enterprise based on economies of multi-plant operation is developed. These economies are modelled as arising from the existence of a joint input whose productivity in each production facility is independent of the number of facilities maintained by a firm. The multinational thus offers the world increased technical efficiency by eliminating the duplication of the joint input that would occur with independent national firms. Since this technical efficiency may come at the expense of increased market power, the full determinants of home country, host country, and world welfare are considered.

Keywords: Multinational Firms; Horizontal Multinationals; Vertical Multinationals; Internalization; Vertical Integration; Outsourcing; Foreign Affiliates; Per-Capita Income; Non-homothetic Preferences; Income Elasticity of Demand; Missing Trade Puzzle; Skill Premium Puzzle; Pro-competitive Gains From Trade; Complements; Externalities (search for similar items in EconPapers)
JEL-codes: F00 F02 F13 F41 F43 (search for similar items in EconPapers)
Date: 2021
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Journal Article: Multinationals, multi-plant economies, and the gains from trade (1984)
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