Trade Regime Choice in the Presence of International Ownership

Abstract

This paper examines the effects of international ownership of firms on trade pattern and values of firms in the intra-industry trade model. Specifically, we consider the possibility that international ownership of firms affects trade flow and firm values via strategic trade policies. We show that international trade and production patterns in such models are determined by the extent of international ownership of firms. We also examine how expectation of government intervention changes the extent of international ownership of the firms. We then consider the possibility that trade regime is chosen by international shareholders.