A Simple Theory of International Trade with Multinational Corporations
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CitationHelpman, Elhanan. 1984. A simple theory of international trade with multinational corporations. Journal of Political Economy 92(3): 451-471.
AbstractUsing the idea that firm-specific assets associated with marketing, management, and product-specific R & D can be used to service production plants in countries other than the country in which these inputs are employed, I develop a simple general equilibrium model of international trade in which the location of plants in a differentiated product industry is a decision variable. The model is then used to derive predictions of trade patterns, volumes of trade, the share of intra-industry trade, and the share of intrafirm trade as functions of relative country size and differences in relative factor endowments.
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