Recent theoretical developments have incorporated endogenous multinational firms into the general-equilibrium model of trade. One simple taxonomy separates the theory into vertical' models in which firms geographically separate activities by stages of production and horizontal' models of multi-plant firms which duplicate roughly the same activities in many countries. We refer to a hybrid of these two as the 'knowledge capital model'. In this paper, we nest these three models within an unrestricted model. Econometric tests give strong support to the horizontal model and overwhelming reject the vertical model.
*Published: This paper was subsequently published as Multinational Firms: Reconciling Theory and Evidence, James R. Markusen, Keith E. Maskus, in NBER book Topics in Empirical International Economics: A Festschrift in Honor of Robert E. Lipsey (2001)
Markusen, J. R. and K. E. Maskus. "Discriminating Among Alternative Theories Of The Multinational Enterprise," Review of International Economics, 2002, v10(4,Nov), 695-707.
You may purchase this paper on-line in .pdf format
from SSRN.com ($5) for electronic delivery.
Machine-readable bibliographic record -
MARC,
RIS,
BibTeX
