文档介绍：Princeton
University
Optimal Integration Strategies for
the Multinational Firm
by
Gene M. Grossman
Princeton50 Univers ity
Elhanan Helpm an
Harvard University, Tel Aviv University, and CIAR
and
Adam Szeidl
Harvard University
Discussion Paper #225
November 2003
Discussion Papers in Economics
Woodrow Wilson School
of Public and International Affairs
Optimal Integration Strategies for the Multinational Firm∗
by
Gene M. Grossman
Princeton University
Elhanan Helpman
Harvard University, Tel Aviv University, and CIAR
and
Adam Szeidl
Harvard University
November 2003
Abstract
We examine integration strategies of multinational firms that face a rich array
of choices of anization. Each firm in an industry must provide
headquarter services from its home country, produce intermediate inputs, and as-
sembletheintermediategoodsintofinal products. Both production of intermediate
goods and assembly can be performed at home, in another “Northern” country, in
the low-wage “South,” or in several of these locations. We study the equilibrium
choices of firms that differ in productivity (and thus size), focusing on the role of
industry characteristics such as the fixed costs of foreign subsidiaries, the cost of
transporting intermediate and final goods, and the share of the consumer market
that resides in the South in determining optimal integration strategies.
JEL Classification: F23, F12, L22
Keywords: direct foreign investment, multinational corporations, intra-firm
trade, vertical integration.
∗We acknowledge with thanks the support of the National Science Foundation (SES 9904480 and
SES 0211748) and the US-Israel Binational Science Foundation (2002132).
1Introduction
The globalization process of recent years has been expressed in the growth of many
types of international transactions, but few more salient than the expansion in the
activity of multinational firms. The grow