This dissertation examines three specific questions about multinational firm behavior when it is influenced by rivals for profit (in the case of foreign input suppliers), rivals for market share (in the case of exports to foreign markets), and rivals for rents (in the case of final good imports).
When international supply relationships are governed by incomplete contracts, the resulting two-sided hold-up problem creates under-investment incentives that inform the choice between outsourcing and offshoring (between non-integrated and integrated foreign suppliers). In the one-shot game, when the procurer invests in capital and the supplier in labor, offshoring (outsourcing) is preferred in capital-intensive (labor-intensive) industries. Chapter 2 reconsiders the equilibrium choices in a repeated game setting. If both parties are sufficiently patient, repeated interaction eliminates under-investment, but factor intensity remains important to the choice of supply structure. The optimal structure switches from integration to non-integration at a higher labor intensity than in the one-shot game. In addition, non-integration is sometimes chosen in both capital-intensive and labor-intensive industries.
Chapter 3 analyzes the export decisions of a multiproduct, multinational firm. It models a duopoly where the multiproduct firm chooses whether to export one or both of its quality levels. The firm must choose from existing product qualities, reflecting the notion that exporting firms do not design distinct products for individual export markets but rather choose those products from an existing portfolio. Firms choose their products for export in Stage 1 of the game and compete in prices in Stage 2. Solving for the subgame perfect Nash equilibrium reveals that discrimination in qualities is profitable if tariffs are low enough and quality differentiation is not too large.
Chapter 4 undertakes an analysis of repeated interaction among firms who compete for rents generated by import quotas. This behavior, known as rent-seeking, is non-productive and has been shown to imply a breakdown of the equivalence of quotas and tariffs (which do not generate rents). However, when firms repeatedly interact, they can cooperate. If firms are sufficiently patient and the quota is not too small, cooperation prevents wasteful rent-seeking, eliminating the divergence in welfare consequences of quotas and tariffs.
|Advisor:||Krishna, Pravin, Harrington, Joseph, Khan, M. Ali|
|School:||The Johns Hopkins University|
|School Location:||United States -- Maryland|
|Source:||DAI-A 74/01(E), Dissertation Abstracts International|
|Subjects:||Economics, International Relations, Organization Theory|
|Keywords:||Boundaries of the firm, Foreign suppliers, Gains from trade, Industrial organization, International trade, Multiproduct firms, Rent-seeking|
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