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Multiproduct multinationals and reciprocal FDI dumping

Journal from gdlhub / 2017-08-14 11:52:53
Oleh : Richard E. Baldwina, Gianmarco I.P. Ottavianob, ELSEVIER (baldwin@hei.unige.ch (R.E. Baldwin).)
Dibuat : 2010-06-30, dengan 1 file

Keyword : Multiproduct, multinationals, reciprocal, FDI, dumping
Url : http://www.elsevier.nl / locate /econbase

Global patterns of FDI and trade are remarkably similar, yet mainstay theory has them as


substitutes.We posit a model where multiproduct, final-goods firms simultaneously engage


in intraindustry FDI and intraindustry trade. The logic behind this two-way FDI is


analogous to that of two-way trade in the Brander–Krugman reciprocal-dumping model.


Namely, multiproduct firms use trade costs to reduce inter-variety competition by placing


production of some varieties abroad. Since the varieties are differentiated, all varieties are


sold in all markets. Thus while FDI displaces some exports, it also creates trade via reverse


imports. This naturally leads to parallelism in the trade and FDI patterns.

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