Economics of Scope, Agglomeration and Location of the Multinational Firm
A classification of the locational patterns of firms (with economies of scope present) is outlined, in order to cast light on the location of the multiplant, multinational firm. This is driven by three forces: economies of scope that follow from the co-location of different activities; transportation costs of the final good; and factor mobility costs. It is concluded that the single-plant firm prevails when spatial economies of scope are strong in relation to either transportation or mobility costs. The vertical (horizontal) multiplant firm emerges when mobility costs of factors (transportation costs on the final good) are high. These two kinds of spatial costs, which are mutually exclusive, favor the formation of multinational firms.
|Date of creation:||2004|
|Contact details of provider:|| Postal: Department of Economics, ISEG - School of Economics and Management, University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL|
Web page: https://aquila1.iseg.ulisboa.pt/aquila/departamentos/EC
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- John B. Parr, 2004. "Economies of scope and economies of agglomeration: The Goldstein-Gronberg contribution revisited," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 38(1), pages 1-11, 03.
- Markusen, James R. & Venables, Anthony J. & Eby Konan, Denise & Zhang, Kevin H., 1996.
"A Unified Treatment of Horizontal Direct Investment, Vertical Direct Investment, and the Pattern of Trade in Goods and Services,"
Working Paper Series
465, Research Institute of Industrial Economics.
- James R. Markusen & Anthony J. Venables & Denise Eby Konan & Kevin H. Zhang, 1996. "A Unified Treatment of Horizontal Direct Investment, Vertical Direct Investment, and the Pattern of Trade in Goods and Services," NBER Working Papers 5696, National Bureau of Economic Research, Inc.
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- Ignatius J. Horstmann & James R. Markusen, 1990. "Endogenous Market Structures in International Trade," NBER Working Papers 3283, National Bureau of Economic Research, Inc.
- Panzar, John C & Willig, Robert D, 1981. "Economies of Scope," American Economic Review, American Economic Association, vol. 71(2), pages 268-272, May. Full references (including those not matched with items on IDEAS)
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