Multinational Firms, Technology Diffusion and Trade

Wilfred Ethier () and James Markusen

No 3825, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Empirical evidence indicates a close association between multinational firms and knowledge capital, a public good within the firm. We model a firm which wishes to exploit its knowledge capital abroad, but whose workers learn all the knowledge necessary for production and can defect and produce the good themselves. The home firm must then choose between costly exporting and the possible dissipation of its knowledge capital by producing abroad. The paper examines the choice between exporting, licensing, and acquiring a subsidiary in this environment. We analyze the cost and technology parameters that support the alternative modes of serving the foreign market, and we describe the international equilibrium that jointly determines the pattern of specialization and the market mode.

Date: 1991-08
Note: ITI IFM
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Citations: View citations in EconPapers (15)

Published as Journal of International Economics, vol.41, 1996, pp. 1-28.

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Journal Article: Multinational firms, technology diffusion and trade (1996)
Working Paper: Multinational Firms, Technology Diffusion and Trade (1993)
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