Reputational Comparative Advantage and Multinational Enterprise
For a firm without a readily identifiable brand name, quality reputation may solely reflect the country of origin. In this paper we endogenize country-of-origin reputations and show that these selffulfilling reputations determine not only the average quality of a country’s exports but also the type of products in which a country specializes. Hence, the pattern of international trade can be determined by reputational comparative advantage. Specialization according to reputational comparative advantage can also establish the location of the host and the parent firm in a multinational enterprise. Furthermore, multinationals that internalize production in a single firm can eradicate a low reputation equilibrium and, therefore, can increase host-country welfare by a greater amount than under a licensing arrangement. Finally, this reputation effect can identify whether internalization, or licensing, is more likely to occur.
|Date of creation:||Aug 2010|
|Date of revision:|
|Contact details of provider:|| Postal: 350 Victoria Street, Toronto, Ontario, M5B 2K3|
Phone: (416) 979-5092
Fax: (415) 979-5273
Web page: http://www.ryerson.ca/economics/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:rye:wpaper:wp016. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maurice Roche)
If references are entirely missing, you can add them using this form.