Multinationals: Too many or too few?- The proximity-concentration trade-off

Toulemonde, Eric
(2008) Open Economies Review — Vol. 19, n° 2, p. 203-219 (2008)

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  • Toulemonde, EricUCLouvain
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Abstract
The paper builds an analytically tractable model that illustrates the "proximity-concentration trade-off" involved in horizontal multinationals. For low trade costs, firms are single-plant firms, for intermediate costs, some are single-plant firms whereas others are multinationals, for large trade costs, firms are multinationals. Because of the modeling strategy, the model is suited for a welfare analysis of multinationals. It shows that too many firms choose to concentrate their production in only one location. Also, for some transport costs, a reduction in transport costs worsens welfare.
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Toulemonde, E. (2008). Multinationals: Too many or too few?- The proximity-concentration trade-off. Open Economies Review, 19(2), 203-219. https://doi.org/10.1007/s11079-007-9019-7 (Original work published 2008)