On the Coexistence of National Companies and Multinational Enterprises

Joern Kleinert ()

No 1181, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: National and multinational companies coexist in many sectors of all developed countries. However, economic models fail to reproduce this fact because of the assumption of symmetry between companies. To show that the symmetry assumption is the reason for this failure, a two-country general equilibrium model is set up where multinational enterprises emerge endogenously in reaction to exogenously induced market integration. In a model version with symmetric companies, stable mixed equilibria with national and multinational companies do not exist, because all companies decide to internationalize production at the same conditions. In contrast, if companies are allowed to differ, there exist a wide range of economic conditions where national and multinational companies coexist.

Keywords: Globalization; Multinational Enterprises; Exports; Market Structure (search for similar items in EconPapers)
JEL-codes: F12 F23 L22 (search for similar items in EconPapers)
Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1181

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