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Appropriate Technology in a Model of Multinational Duopoly

  • Michael J. Ferrantino
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    This paper seeks to motivate the observed tendency of multinationals with home bases in LDCs to adopt labor-intensive technology relative to their counterparts in industrial countries. Two multinationals play a spatial duopoly game in which the location, mode of market service (exports or on-site production), and technology choice of the third-world multinational are simultaneously determined. The model is calibrated using observed data on transport costs, factor shares, research intensity, and international income distribution. LDC firms are shown to prefer labor-intensive technological adaptation even when the option of producing on-site in high-income markets is available.

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    Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

    Volume (Year): 24 (1991)
    Issue (Month): 3 (August)
    Pages: 660-78

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    Handle: RePEc:cje:issued:v:24:y:1991:i:3:p:660-78
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