Multinational Firms and the Structure of International Trade

Pol Antras and Stephen Yeaple

No 18775, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This article reviews the state of the international trade literature on multinational firms. This literature addresses three main questions. First, why do some firms operate in more than one country while others do not? Second, what determines in which countries production facilities are located? Finally, why do firms own foreign facilities rather than simply contract with local producers or distributors? We organize our exposition of the trade literature on multinational firms around the workhorse monopolistic competition model with constant-elasticity-of-substitution (CES) preferences. On the theoretical side, we review alternative ways to introduce multinational activity into this unifying framework, illustrating some key mechanisms emphasized in the literature. On the empirical side, we discuss the key studies and provide updated empirical results and further robustness tests using new sources of data.

JEL-codes: D2 D21 D22 D23 F1 F12 F2 F23 F61 L2 (search for similar items in EconPapers)
Date: 2013-02
New Economics Papers: this item is included in nep-cse and nep-int
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Citations: View citations in EconPapers (34)

Published as Handbook of International Economics Volume 4, 2014, Pages 55–130 Handbook of International Economics Cover image Chapter 2 – Multinational Firms and the Structure of International Trade * Pol Antràsa, b, c, Stephen R. Yeapleb, d

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