Foreign market entry under incomplete contracts

Arbeitspapier

I show in this paper that incomplete contracts affect a firm's decision about serving foreign customers through exports or local sales from an affiliated plant. When contracts between two agents within a firm are too costly to write, the share of multinational firms may be higher or lower compared to a world without contractual frictions. Incomplete contracts also provide a novel explanation for why horizontal multinational activity may increase when trade costs fall - a result that is at odds with the proximity-concentration trade-off.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 3248

Classification and Topics

• Classification: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Economic Integration ; Multinational Firms; International Business
• Subject: multinational firms ; exports ; incomplete contracts ; Internationale Markteintrittsstrategie ; Multinationales Unternehmen ; Export ; Unvollständiger Vertrag ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Seidel, Tobias
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/46258
• Last update: 10.03.2025, 11:44 AM CET