Research / BFI Working PaperJan 31, 2024

Export-Platform FDI: Cannibalization or Complementarity?

Pol Antràs, Evgenii Fadeev, Teresa C. Fort, Felix Tintelnot

We develop a model of export-platform foreign direct investment (FDI) 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.

More Research From These Scholars

BFI Working Paper Aug 19, 2019

The Effects of Foreign Multinationals on Workers and Firms in the United States

Bradley Setzler, Felix Tintelnot
Topics:  Employment & Wages
BFI Working Paper Jul 1, 2016

What Drives Home Market Advantage?

Felix Tintelnot, A. Kerem Coşar, Paul E. Grieco, Shengyu Li
Topics:  Industrial Organization
BFI Working Paper Aug 7, 2016

The Margins of Global Sourcing: Theory and Evidence from U.S. Firms

Felix Tintelnot, Pol Antràs, Teresa Fort
Topics:  Industrial Organization