Scale, Scope, and the International Expansion Strategies of Multiproduct Firms

36 Pages Posted: 29 Jun 2013

See all articles by Stephen R. Yeaple

Stephen R. Yeaple

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

Date Written: June 2013

Abstract

A growing literature seeks to understand how the characteristics of firms shape the manner in which they serve foreign markets. We consider an environment in which multiproduct firms can sell their products in multiple countries from multiple locations. We show that there are strong empirical regularities in the expansion strategies of U.S. multinational firms and that simple extensions of standard models do not explain these regularities. We augment these models by introducing a framework in which organizational capital is a scarce input within the firm that has to be allocated to particular products and production locations and show that the standard model, so amended, is consistent with the data. We then use the model to analyze the productivity effect of changes in international frictions both within and across firms.

Suggested Citation

Yeaple, Stephen R., Scale, Scope, and the International Expansion Strategies of Multiproduct Firms (June 2013). NBER Working Paper No. w19166. Available at SSRN: https://ssrn.com/abstract=2287026

Stephen R. Yeaple (Contact Author)

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

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National Bureau of Economic Research (NBER)

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