The purpose of this paper is to investigate the influence of a third country on the location of foreign direct investment (FDI). We focus on two determinants of FDI location. The first is the number of firms located in the third country. The second is the magnitude of demand for the good that...

A Grossman-Helpman-Romer-type endogenous-growth model is developed in this study. This model has two countries in which there are knowledge spillovers that are partially local. Owing to these spillovers, innovation cost in a particular country decreases as the number of firms locating in both...