TY - JOUR AU - Markusen, James R AU - Venables, Anthony J TI - The Theory of Endowment, Intra-Industry, and Multinational Trade JF - National Bureau of Economic Research Working Paper Series VL - No. 5529 PY - 1996 Y2 - April 1996 DO - 10.3386/w5529 UR - http://www.nber.org/papers/w5529 L1 - http://www.nber.org/papers/w5529.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 Anthony Venables Department of Economics University of Oxford Manor Road Building Manor Road Oxford OX1 3UQ, United Kingdom and CEPR E-Mail: tony.venables@economics.ox.ac.uk AB - We consider a trade model combining a 2x2x2 Heckscher-Ohlin structure, monopolistic competition, transport costs, and multinational corporations. We demonstrate how the mix of national and multinational firms that operate in equilibrium depends on technology and on the division of the world endowment between countries. Multinationals are more likely to exist the more similar are countries in both relative and absolute endowments. Where multinationals exist they reduce the volume of trade and raise world welfare (although not necessarily that of both countries). They also reduce the agglomeration forces that arise when international factor mobility is allowed. ER -