This paper shows that with subsidiaries of different nature due to locational characteristics, the multinational firm not only charges different transfer prices, but also supplies different levels of the intermediate input to the downstream branch. In particular, interior transfer prices are...

This paper studies intra-industry foreign direct investment in a 2*2*2 general equilibrium model with bilateral monopoly in the factor market and unilateral monopoly fn the product market. Intra-industry investment is presented as the endogenous result of the interactions between multinational...