Kiel Working Papers, Kiel Institute for World Economics
No 1181:
On the Coexistence of National Companies and Multinational Enterprises
Jörn Kleinert
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; (follow links to similar papers)
JEL-Codes: F12,; F23,; L22; (follow links to similar papers)
44 pages, September 2003
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