Welfare , home market e ff ects , and horizontal foreign direct investment ∗
نویسندگان
چکیده
We investigate the spatial distribution and organization of an imperfectly competitive industry when Þrms may choose to operate more than a single production unit. Focusing on a short-run setting with a Þxed mass of Þrms, we fully characterize the spatial equilibria analytically. Comparing the equilibrium and the Þrst-best, we show that both organizational and spatial inefficiencies may arise. In particular, when Þxed costs are low enough the market outcome may well lead to overinvestment and, therefore, to too many multinationals operating from a social point of view. Furthermore, once multinationals are taken into account, the market outcome may well lead too little agglomeration.
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