Optimal Integration Strategies for the Multinational Firm

Gene M. Grossman, Elhanan Helpman and Adam Szeidl

No 2024, Harvard Institute of Economic Research Working Papers from Harvard - Institute of Economic Research

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.

Date: 2003
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Related works:
Journal Article: Optimal integration strategies for the multinational firm (2006)
Working Paper: Optimal Integration: Strategies for the Multinational Firm (2004)
Working Paper: Optimal Integration Strategies for the Multinational Firm (2003)
Working Paper: Optimal Integration Strategies for the Multinational Firm (2003)
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