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2011/2012  KAN-AEF_41  The Firm in a Global Environment

English Title
The Firm in a Global Environment

Course Information

Language English
Point 7,5 ECTS (225 SAT)
Type Mandatory
Level Full Degree Master
Duration One Semester
Course Period Spring
Time Table Please see course schedule at e-Campus
Study Board
Study Board for MSc in Economics and Business Administration
Course Coordinator
  • Pascalis Raimondos-Møller - Department of Economics
Main Category of the Course
  • Globalization, International Business, markets and studies
Last updated on 29 maj 2012
Learning Objectives
Students are required to:
- Analyse the opportunities that a firm faces with respect to location. This includes consideration of whether to export or to become a multinational. This decision in turn, includes evaluation of differences in production costs, taxes, tariffs and growth opportunities.
- Understand the interaction between firms and firm and government or other institutions. This includes analysing the role and impact of government policy, of supranational policy, and of the presence of multilateral agents.
- Be familiar with the theoretical models of international economic aspects covered in the course. This includes calculating numerical solutions to simple economic models and to provide intuition behind the results both verbally and through graphical representation.
- Apply the taught theoretical models of international economic aspects to real world situations.

The Firm in a Global Environment:
Assessment Written Exam
Marking Scale 7-step scale
Censorship No censorship
Exam Period May/June and April
Aids Open Book, Written and Electronic Aid is permitted
Duration 4 Hours
Open book, written aids and calculators are permitted, but no PCs and mobile phones.
Course Content
This is a graduate course in international trade. Its aim is to provide students with knowledge on how countries and their firms manage to achieve their comparative and competitive advantage when trading with other countries and firms in the world. Starting from the traditional trade theories, we advance in the modern theories of trade, where emphasis is on the firm and its global opportunities. Empirical evidence on firms’ behaviour are presented and analysed. A central element of the course is to document that the internationalisation of the firm is an endogenous choice that accrues to the most efficient firms.

As it is well known, firms have several possibilities when they want to serve international markets. The course investigates the reasons for why firms choose to export their products rather than serving them by producing directly in that market (through a direct foreign investment). The existent literature provides several possible explanations of what makes firms decide to locate in a particular country (the comparative advantage hypothesis, the home-market effect, increasing returns to scale (internal or external to the firms), economic geography), and as such they will be reviewed in order to provide a comprehensive understanding of the location decision.

Given this emergence of the global firm, the course concludes by looking at economic policy issues and the challenges therein. Comparative advantage; increasing returns to scale; home-market effect; outsourcing; multinational enterprises. The course builds on knowledge from Microeconomics. Knowledge of International Economics will be helpful.

Teaching Methods
Lectures mixed with exercices.
Preliminary literature.