On the Coexistence of National Companies and Multinational Enterprises

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.

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Year of publication:	2003
Authors:	Kleinert, Jörn
Publisher:	Kiel : Kiel Institute for the World Economy (IfW)
Subject:	Multinationales Unternehmen \| Internationale Markteintrittsstrategie \| Allgemeines Gleichgewicht \| Mehr-Sektoren-Modell \| Zwei-Länder-Modell \| Marktstruktur \| Globalisierung \| Theorie \| Globalization \| Multinational Enterprises \| Exports \| Market Structure

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Series:	Kiel Working Paper ; 1181
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	369914562 [GVK] hdl:10419/17704 [Handle] RePEc:zbw:ifwkwp:1181 [RePEc]
Classification:	L22 - Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration ; F23 - Multinational Firms; International Business ; F12 - Models of Trade with Imperfect Competition and Scale Economies
Source:	EconStor