Excerpt from An Empirical Assessment of the Proximity/Concentration Tradeoff Between Multinational Sales and Trade Consider a two-sector, two-country world, where firms in a differentiated products sector choose between exporting and cross-border expansion as alternative modes of foreign market penetration. Demand is identical and homothetic acm classes of goods, and there is a constant elasticity of substitution, 0, among varieties of a good. The differentiated sector is characterized by increasing returns at the firm level due to some input, such as r&d, that can be spread among any number of production facilities with undiminished value, scale economies at the plant level, such that concentrating production lowers unit costs, and a variable transport cost that rises with distance. The decision whether to expand abroad via trade or via investment hinges on a trade-off between these proximity advantages and scale advantages from concentrating production in a single location. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.