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Export-Platform FDI: Cannibalization or Complementarity?

Author

Listed:
  • Pol Antràs
  • Evgenii Fadeev
  • Teresa C. Fort
  • Felix Tintelnot

Abstract

We develop a model of export-platform foreign direct investment in which final goods are produced only with labor and there are no fixed costs of exporting. We derive a simple condition that determines whether an MNE's plants are substitutes or complements. This condition is shaped by the relative size of (i) the cross-firm elasticity of demand the MNE faces for its goods and (ii) the within-firm elasticity of labor substitution across the MNE's plants. In two extensions of the model, we show that this complementarity is enhanced by firm-level (rather than plant-level) fixed costs of exporting and of sourcing inputs.

Suggested Citation

  • Pol Antràs & Evgenii Fadeev & Teresa C. Fort & Felix Tintelnot, 2024. "Export-Platform FDI: Cannibalization or Complementarity?," AEA Papers and Proceedings, American Economic Association, vol. 114, pages 130-135, May.
    • Handle: RePEc:aea:apandp:v:114:y:2024:p:130-35
    DOI: 10.1257/pandp.20241021
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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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