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A Simple Theory of International Trade with Multinational Corporations

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  • Helpman, Elhanan

Abstract

Using the idea that firm-specific assets associated with marketing, management, and product-specific R & D can be used to service production plants in countries other than the country in which these inputs are employed, I develop a simple general equilibrium model of international trade in which the location of plants in a differentiated product industry is a decision variable. The model is then used to derive predictions of trade patterns, volumes of trade, the share of intra-industry trade, and the share of intrafirm trade as functions of relative country size and differences in relative factor endowments.
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Suggested Citation

  • Helpman, Elhanan, 1984. "A Simple Theory of International Trade with Multinational Corporations," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 451-471, June.
    • Handle: RePEc:ucp:jpolec:v:92:y:1984:i:3:p:451-71
    DOI: 10.1086/261236
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