Export vs. FDI: Sandwich Sorting with Quadratic Preferences

Herzig N (2016) Working Papers in Economics and Management; 03-2016.
Bielefeld: Bielefeld University, Department of Business Administration and Economics.

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Abstract
By applying quadratic instead of CES consumer preferences in a monopolistic competition model with heterogeneous firms, this paper investigates the robustness of the conventional sorting of cross-border active firms, first described by Helpman, Melitz and Yeaple (2004), and finds thereby an alternative type of sorting: While (sufficiently) productive firms export and more productive ones engage in foreign direct investment (FDI), the most productive firms do not undertake FDI, but export again, establishing the so-called sandwich sorting. Evidence for this type can be observed for investment and services trade patterns.
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Herzig N. Export vs. FDI: Sandwich Sorting with Quadratic Preferences. Working Papers in Economics and Management. Vol 03-2016. Bielefeld: Bielefeld University, Department of Business Administration and Economics; 2016.
Herzig, N. (2016). Export vs. FDI: Sandwich Sorting with Quadratic Preferences (Working Papers in Economics and Management, 03-2016). Bielefeld: Bielefeld University, Department of Business Administration and Economics. doi:10.4119/unibi/2915591
Herzig, N. (2016). Export vs. FDI: Sandwich Sorting with Quadratic Preferences. Working Papers in Economics and Management, 03-2016, Bielefeld: Bielefeld University, Department of Business Administration and Economics.
Herzig, N., 2016. Export vs. FDI: Sandwich Sorting with Quadratic Preferences, Working Papers in Economics and Management, no.03-2016, Bielefeld: Bielefeld University, Department of Business Administration and Economics.
N. Herzig, Export vs. FDI: Sandwich Sorting with Quadratic Preferences, Working Papers in Economics and Management, vol. 03-2016, Bielefeld: Bielefeld University, Department of Business Administration and Economics, 2016.
Herzig, N.: Export vs. FDI: Sandwich Sorting with Quadratic Preferences. Working Papers in Economics and Management, 03-2016. Bielefeld University, Department of Business Administration and Economics, Bielefeld (2016).
Herzig, Niklas. Export vs. FDI: Sandwich Sorting with Quadratic Preferences. Bielefeld: Bielefeld University, Department of Business Administration and Economics, 2016. Working Papers in Economics and Management. 03-2016.
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