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Leahy, Dermot (2004) Divide and Rule: Geographical Diversification and the Multinational Firm. Open Economies Review, 15. pp. 363-374. ISSN 0923-7992
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Abstract
We develop a model to illustrate a motive for FDI that derives from a firm’s overall locational
strategy. A firm, that initially has a plant in its home country, may choose to also have a foreign
plant in order to improve its bargaining position versus local labour unions. This permits
the firm to reduce wages. Furthermore, the existence of a second foreign plant acts to discipline
the demands of foreign workers. Thus, the firm is faced with a link between the wage and
its degree of geographical diversification. This drives up the number of plants the firm has in
equilibrium.
| Item Type: | Article |
|---|---|
| Keywords: | foreign direct investment; labour unions; multinational corporations; geographical diversification; |
| Academic Unit: | Faculty of Social Sciences > Economics, Finance and Accounting |
| Item ID: | 8465 |
| Depositing User: | Dermot Leahy |
| Date Deposited: | 18 Jul 2017 11:12 |
| Journal or Publication Title: | Open Economies Review |
| Publisher: | Springer Verlag |
| Refereed: | Yes |
| Related URLs: | |
| Use Licence: | This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available here |
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