TY  - JOUR
AU  - Ethier,Wilfred J.
AU  - Markusen,James R.
TI  - Multinational Firms, Technology Diffusion and Trade
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3825
PY  - 1991
Y2  - August 1991
UR  - http://www.nber.org/papers/w3825
L1  - http://www.nber.org/papers/w3825.pdf
N1  - Author contact info:
James R. Markusen
Department of Economics
University of Colorado
Boulder, CO 80309-0256
Tel: 303/492-0748
Fax: 303/492-8960
E-Mail: james.markusen@colorado.edu
AB  - Empirical evidence indicates a close association between multinational firms and knowledge capital, a public good within the firm. We model a firm which wishes to exploit its knowledge capital abroad, but whose workers learn all the knowledge necessary for production and can defect and produce the good themselves. The home firm must then choose between costly exporting and the possible dissipation of its knowledge capital by producing abroad. The paper examines the choice between exporting, licensing, and acquiring a subsidiary in this environment. We analyze the cost and technology parameters that support the alternative modes of serving the foreign market, and we describe the international equilibrium that jointly determines the pattern of specialization and the market mode.
ER  -