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1. For each cases a) and b), specify whether the foreign direct investment is horizontal or vertical; in addition, describe whether that investment represents an FDI inflow or outflow from the countries that are mentioned.
a) McDonald's (a US multinational) opens up and operates new restaurants in Europe.
b) Total (a French oil multinational) buys ownership and exploration rights to oil fields in Cameroon.
c) What would the examples above imply for the extent of intra-firm trade. That is, in what industries would a greater proportion of trade occur within firms?
2. If there are internal economies of scale, why would it ever make sense for a firm to produce the same good in more than one production facility?
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Present in detail the following two theories/models associated with “post-Heckscher-Ohlin” trade theory. In the case of each theory/model, be sure to indicate important characteristics of real-world international trade that the theory/model is attemp..
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Suppose the market demand for boxes of cigars is given by P = 100 – Q. There are two firms, A and B, producing cigars, each with the same constant MC of €5. If the firms: a. Collude and divide the market equally between them, how many boxes of cigars..
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