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Scale, scope, and the international expansion strategies of multiproduct firms

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  • Stephen Ross Yeaple

Abstract

A growing literature seeks to understand how the characteristics of firms shape the manner in which they serve foreign markets. We consider an environment in which multiproduct firms can sell their products in multiple countries from multiple locations. We show that there are strong empirical regularities in the expansion strategies of U.S. multinational firms and that simple extensions of standard models do not explain these regularities. We augment these models by introducing a framework in which organizational capital is a scarce input within the firm that has to be allocated to particular products and production locations and show that the standard model, so amended, is consistent with the data. We then use the model to analyze the productivity effect of changes in international frictions both within and across firms.

Suggested Citation

  • Stephen Ross Yeaple, 2023. "Scale, scope, and the international expansion strategies of multiproduct firms," Review of International Economics, Wiley Blackwell, vol. 31(4), pages 1385-1413, September.
    • Handle: RePEc:bla:reviec:v:31:y:2023:i:4:p:1385-1413
    DOI: 10.1111/roie.12670
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    JEL classification:

    • F1 - International Economics - - Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F6 - International Economics - - Economic Impacts of Globalization

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