chapter  8
6 Pages

Divide and rule by transnational corporations


Why are there transnational corporations? For example, supposing firm A initially produces in country X, why should it acquire production facilities in country Y? Similarly, if it initially produces in X and Y, why should it acquire further facilities in Y? In answering this question, analysis has traditionally followed the general rule of economics, to be obsessed with (Pareto) efficient outcomes. However, this chapter is more unusual: it pursues an analysis emphasizing distribution.