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Essay Details:
Essay text:
Firm exploits the advantages itself rather than leasing to other firms.
Why internalise rather than licence to domestic firms?
- Uncertainty of price
- Uncertainty of quality of imports
- Imperfect markets
Gives advantage to control transactions itself
? Large firms internalise R&D to protect against predators and ensure good return
Location specific factors:
- Resources ? Human Capital, Raw Materials
- Pay less tax
- Political environment to conduct sensitive research
- Political Stability
- Markets
Advantages
Simplicity:
? applicable to most firms
? can explain the nature of most firms
Interrelatedness of three variables and how they can be applied separately or together...
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