Recent theories of the multinational corporation introduce the property rights model of the firm and examine whether to integrate our outsource firm activities locally or to a foreign country. This paper focus instead on the internal organization of the multinational corporation by examining the power allocation between headquarters and subsidiaries. We provide a framework to analyse the interaction between the decision to serve the local market by exporting or FDI, market access and the optimal mode of organization of the multinational corporation. We find that subsidiary managers are given most autonomy in their decision how to run the firm at intermediate levels of local competition. We then provide comparative statistics for changes in fixed FDI entry costs and trade costs, information technology, the number of local competitors, and in the size of the local market.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
6341.
Dalia Marin & Verdier Thierry, 2007.
"Power in the Multinational Corporation in Industry Equilibrium,"
Discussion Papers
209, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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Find related papers by JEL classification: D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights F1 - International Economics - - Trade F2 - International Economics - - International Factor Movements and International Business
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Dalia Marin & Thierry Verdier, 2007.
"Competing in Organizations: Firm Heterogeneity and International Trade,"
Discussion Papers
207, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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Other versions:
Pol Antràs & Elhanan Helpman, 2003.
"Global Sourcing,"
NBER Working Papers
10082, National Bureau of Economic Research, Inc.
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