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Appendix: Theories of International Trade and the Multinational Enterprise

Appendix: Theories of International Trade and the Multinational Enterprise

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Exhibit 1-3: Comparative Advantage at Work



Chapter 1



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Inc.



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Exhibit 1-4: International Product Cycle



Chapter 1



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Inc.



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4. Appendix: Theories of International Trade

and the Multinational Enterprise











Economies of Scope

Technological Gap

Preference Similarity

Stages of International Product Cycle Theory:

• Introduction Stage

– A U.S. company innovates on a new product in its home

country.



• Growth Stage

– Product standards emerge and mass production

becomes feasible.

Continued

Chapter 1



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Inc.



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4. Appendix: Theories of International Trade

and the Multinational Enterprise

Continued

•Maturity Stage

– Many U.S. and foreign companies vie for market share in

the international markets.



•Decline Stage

– Companies in the developing countries also begin

producing the product and marketing it in the rest of the

world.



Chapter 1



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Inc.



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4. Appendix: Theories of International Trade

and the Multinational Enterprise

• Internalization/Transaction Cost Theory

• Resource-Based View and Appropriability

Theory

– Appropriability Regime

– Dominant Design

– Operational and Marketing Ability



Chapter 1



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Inc.



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