ABSTRACT
Literatures on international trade theory and the theory of the multinational enterprise have largely developed separately, with little overlap among either researchers or readers. Trade theory took a general-equilibrium path, with models predominately based on the twin assumptions of constant returns to scale and perfect competition. In such a framework, there is essentially no role for multinational firms since there are no technological or other features to support their existence in equilibrium. Indeed, there is no role for firms at all and authors speak only of ‘industries’, not firms.
