Abstract
Location is a key concept in international business. The locations at which a firm controls production determine whether it is multinational or not. Firms often locate production away from the markets they plan to serve. Trade is therefore essential to deliver their products to the customers. Policy-makers often advocate ‘free trade’; but what exactly do they mean by this, and why is it supposed to be such a good thing? Economic theory answers these questions (and other questions of the same kind). The key lessons of economic theory for location and trade are set out in this chapter.
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Bibliography
On welfare analysis applied to IB see
Casson, M. (2007). Multinational enterprises: Their private and social benefits and costs. World Economy, 30(2), 308–328.
MacDougall, G. D. A. (1960). The benefits and costs of private investment from abroad: A theoretical approach. Economic Record, 36, 13–35.
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Casson, M. (2016). Introduction to Location. In: The Theory of International Business. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-32297-1_4
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DOI: https://doi.org/10.1007/978-3-319-32297-1_4
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