Multinational Firms and the Structure of International Trade

80 Pages Posted: 9 Feb 2013

See all articles by Pol Antras

Pol Antras

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Stephen R. Yeaple

Pennsylvania State University - College of the Liberal Arts - Department of Economic; National Bureau of Economic Research (NBER)

Date Written: February 2013

Abstract

This article reviews the state of the international trade literature on multinational firms. This literature addresses three main questions. First, why do some firms operate in more than one country while others do not? Second, what determines in which countries production facilities are located? Finally, why do firms own foreign facilities rather than simply contract with local producers or distributors? We organize our exposition of the trade literature on multinational firms around the workhorse monopolistic competition model with constant-elasticity-of-substitution (CES) preferences. On the theoretical side, we review alternative ways to introduce multinational activity into this unifying framework, illustrating some key mechanisms emphasized in the literature. On the empirical side, we discuss the key studies and provide updated empirical results and further robustness tests using new sources of data.

Suggested Citation

Antras, Pol and Yeaple, Stephen R., Multinational Firms and the Structure of International Trade (February 2013). NBER Working Paper No. w18775. Available at SSRN: https://ssrn.com/abstract=2214245

Pol Antras (Contact Author)

Harvard University - Department of Economics ( email )

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Stephen R. Yeaple

Pennsylvania State University - College of the Liberal Arts - Department of Economic ( email )

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