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International Market Structuring with a Multinational Enterprise

International Market Structuring with a Multinational Enterprise

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This paper examines the economic rationales and conditions for the emergence of multinational enterprises (MNEs). Promoting production efficiency is not sufficient to justify the emergence of an MNE. With taxes in the model, tax authorities heavily tax an MNE`s economic activities, in which case an MNE becomes harder to justify on welfare grounds. This arises from the public good nature of MNEs and suggests a tax policy coordination to foster welfare improvement through the emergence of MNEs. (JEL: F23, D43, H21)

Ⅰ. Introduction

Ⅱ. The Model

Ⅲ. A Case for a Multinational Enterprise

Ⅳ. Strategic Tax Policy

Ⅴ. Concluding Remarks

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