In the last decades, foreign direct investment (FDI) has increased strongly among industrialised countries. U.S. companies were the first to set up foreign affiliates followed later by companies from smaller industrialised countries. This paper develops a general equilibrium model of...

We merge German balance-of-payments and foreign-affiliate-trade statistics to obtain data about trade in commercial services at the firm level. We use these data to study export market participation and the choice of export mode: cross-border versus foreign affiliate sales. We find that for...

We provide firm-level evidence concerning four key facts of services trade in Germany. First, not only firms classified as service firms, but also firms from all industries export and import services. Second, service trade patterns are fairly similar to those in goods trade. Most notably,...

National and multinational companies coexist in many sectors of all developed countries. However, economic models fail to reproduce this fact because of the assumption of symmetry between companies. To show that the symmetry assumption is the reason for this failure, a two-country general...