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Article: Information, incentives and multinational firms

TitleInformation, incentives and multinational firms
Authors
KeywordsMNEs
Outsourcing
Organization of production
FDI
Issue Date2011
PublisherElsevier. The Journal's web site is located at http://www.sciencedirect.com/science/journal/00221996
Citation
Journal of International Economics, 2011, v. 85, n. 1, p. 147-158 How to Cite?
AbstractI present a model that explains a multinational firm's choice of organizational form. If a firm in the developed country outsources the production of its intermediate goods to a supplier in the developing country, it faces an adverse selection problem. If it chooses to produce the intermediate goods in its own subsidiary in the developing country, it faces an inefficient monitoring problem. My analysis of this tradeoff provides a new explanation for the observation that FDI is concentrated in capital intensive industries and yields two empirical hypotheses: more firms should adopt outsourcing instead of FDI after trade liberalization; the share of intra-firm trade in total trade should be increasing in the degree of productivity dispersion across intermediate goods suppliers in the developing country. © 2011 Elsevier B.V.
Persistent Identifierhttp://hdl.handle.net/10722/202197
ISSN
2015 Impact Factor: 2.017
2015 SCImago Journal Rankings: 3.723
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorChen, Cheng-
dc.date.accessioned2014-08-22T02:57:47Z-
dc.date.available2014-08-22T02:57:47Z-
dc.date.issued2011-
dc.identifier.citationJournal of International Economics, 2011, v. 85, n. 1, p. 147-158-
dc.identifier.issn0022-1996-
dc.identifier.urihttp://hdl.handle.net/10722/202197-
dc.description.abstractI present a model that explains a multinational firm's choice of organizational form. If a firm in the developed country outsources the production of its intermediate goods to a supplier in the developing country, it faces an adverse selection problem. If it chooses to produce the intermediate goods in its own subsidiary in the developing country, it faces an inefficient monitoring problem. My analysis of this tradeoff provides a new explanation for the observation that FDI is concentrated in capital intensive industries and yields two empirical hypotheses: more firms should adopt outsourcing instead of FDI after trade liberalization; the share of intra-firm trade in total trade should be increasing in the degree of productivity dispersion across intermediate goods suppliers in the developing country. © 2011 Elsevier B.V.-
dc.languageeng-
dc.publisherElsevier. The Journal's web site is located at http://www.sciencedirect.com/science/journal/00221996-
dc.relation.ispartofJournal of International Economics-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.rightsNOTICE: this is the author’s version of a work that was accepted for publication in Journal of International Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in PUBLICATION, [VOL 85, ISSUE 1, (2011)] DOI 10.1016/j.jinteco.2011.05.005-
dc.subjectMNEs-
dc.subjectOutsourcing-
dc.subjectOrganization of production-
dc.subjectFDI-
dc.titleInformation, incentives and multinational firms-
dc.typeArticle-
dc.description.naturepreprint-
dc.identifier.doi10.1016/j.jinteco.2011.05.005-
dc.identifier.scopuseid_2-s2.0-80052264604-
dc.identifier.volume85-
dc.identifier.issue1-
dc.identifier.spage147-
dc.identifier.epage158-
dc.identifier.isiWOS:000295441400012-

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