This paper examines how differences in the integration strategies followed by firms active in foreign markets affect the way productivity and policy shocks spread their effects worldwide. The analysis incorporates costly trade and local sales by multinational firms in a general-equilibrium open...

This paper provides a framework for the analysis of firms' integration strategies that incorporates the endogenous determination of the number of firms that serve foreign markets through exports and the number of multinational firms that choose to engage in horizontal foreign direct investments....