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Appropriate Technology in a Model of Multinational Duopoly

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  • Michael J. Ferrantino

Abstract

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.

Suggested Citation

  • Michael J. Ferrantino, 1991. "Appropriate Technology in a Model of Multinational Duopoly," Canadian Journal of Economics, Canadian Economics Association, vol. 24(3), pages 660-678, August.
    • Handle: RePEc:cje:issued:v:24:y:1991:i:3:p:660-78
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    Cited by:

    1. Michael Ferrantino, 1993. "The effect of intellectual property rights on international trade and investment," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 129(2), pages 300-331, June.

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