Abstract
This chapter applies the techniques of economic modelling to the complex issue of optimising ownership and its associated contractual arrangements. It shows that the optimisation of ownership by a firm is conditional on the location of its production activities, and vice versa. It demonstrates how a complex optimisation problem of this kind can be solved sequentially. It also considers the strategic implications of this sequential solution for international business behaviour.
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Bibliography
The concept of coordination is analysed in depth in
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In Model 7 the full internalisation strategy involves vertical integration of production and marketing. Relevant literature on the theory on vertical integration includes
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On the application of coordination costs to supply chains see:
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Casson, M., & Wadeson, N. (2012). The economic theory of international business: A supply chain perspective. Multinational Business Review, 20(2), 114–134.
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Casson, M. (2016). Modelling Contractual Arrangements. In: The Theory of International Business. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-32297-1_7
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DOI: https://doi.org/10.1007/978-3-319-32297-1_7
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