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2015/2016  KAN-CCMVV3002U  The Firm in a Global Environment

English Title
The Firm in a Global Environment

Course information

Language English
Course ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration One Semester
Start time of the course Spring
Timetable Course schedule will be posted at calendar.cbs.dk
Study board
Study Board for MSc in Economics and Business Administration
Course coordinator
  • Pascalis Raimondos - Department of Economics (ECON)
  • Søren Bo Nielsen - Department of Economics (ECON)
Kontaktinformation: https:/​/​e-campus.dk/​studium/​kontakt eller Contact information: https:/​/​e-campus.dk/​studium/​kontakt
Main academic disciplines
  • Globalization and international business
Last updated on 09-10-2015
Learning objectives
To achieve the grade 12, students should meet the following learning objectives with no or only minor mistakes or errors: Students are required to:
  • Analyse the opportunities that a firm faces with respect to location when considering whether to export or to become a multinational, evaluation of differences in production costs, taxes, tariffs and growth opportunities.
  • Analyse the interaction between firms, and firm and government, in connection with becoming a multinational firm.
  • Explain the opportunities that multinational firms have in shifting profits, and how that could be constrained by government regulations.
  • Evaluate the positive and negative aspects of multinational firms.
  • Discuss the theoretical models of international aspects covered in the course.
  • Apply the taught theoretical models of international economic aspects to real world situations.
The Firm in a Global Environment:
Exam ECTS 7,5
Examination form Written sit-in exam
Individual or group exam Individual
Assignment type Written assignment
Duration 4 hours
Grading scale 7-step scale
Examiner(s) One internal examiner
Exam period Summer
Aids allowed to bring to the exam Closed Book: no aids
Make-up exam/re-exam
Same examination form as the ordinary exam
If the number of registered candidates for the make-up examination/re-take examination warrants that it may most appropriately be held as an oral examination, the programme office will inform the students that the make-up examination/re-take examination will be held as an oral examination instead.
Course content and structure

The course focuses on the most profund example that we have of how firms operate in the global economy, viz. multinational enterprises.
The first half of the course focuses on positive aspects of multinationals' behaviour, i.e. what determines their choices of where to produce, and how to to serve foreign markets: exporting, investing abroad, or licensing its production abroad.  A central element of the course is to document that becoming multinational is an endogenous choice that accrues to the most efficient firms.
The second half of the course focuses on normative aspects of multinationals' behaviour, i.e. whether there are positive productivity spillover effects to domestic firms from attracting multinationals and, moreover, whether multinationals can be easily regulated by domestic governments. Within this latter issue, we focus on whether there exists a, so-called, race-to-the-bottom type of externality with respect to corporate income taxation.

Multinational Firms, Foreign Direct Investment, Locational Theories, Productivity Spillovers, Tax Competiton, Fiscal Externalities.

The course builds on knowledge from Microeconomics and Industrial Organization. Knowledge of International Economics will be helpful.

Teaching methods
Lectures mixed with exercices.
Expected literature



Navaretti, G.B. and A. Venables. 2004. “Chapter One: Facts and Issues,” in Multinational Firms in the World Economy, Princeton University Press.


Melitz, M., E. Helpman, and S. Yeaple, 2004, “Export Versus FDI with Heterogeneous Firms”, American Economic Review, 94, 300-316.


Ethier, W. and J. Markusen. 1996. “ Multinational Firms, Technology Diffusion and TradeJournal of International Economics, 41, 1-28.


Carr, D., J. Markusen, and K. Maskus, 2001, “Estimating the Knowledge Capital Model of the Multinational Enterprise”. American Economic Review 91, 694-708.


Hanson, G., R. Mataloni, and M.Slaughter, 2001, "Expansion Strategies of U.S. Multinational Firms, Bureau of Economic Analysis WP2001-01.


Hanson, G., R. Mataloni, and M.Slaughter, 2005, “Vertical production networks in multinational firms”, Review of Economics and Statistics 87, 664-678.


Aitken, B. And A. Harrison, 1999, “ Do Domestic Firms benefit from Direct Foreign Investment? Evidence from VenezuelaAmerican Economic Review 89, 605-618.


Javorcik, B.S., 2004, Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers through Backward Linkages  American Economic Review 94, 605-627.


Kaplan, R.S. and A.A. Atkinson, 1998, Advanced Management Accounting, Prentice-Hall, Chapters 7 and 9


Nielsen, S.B. (2015), Notes on international taxation


Haufler, A. and I. Wooton (1999), Country size and tax competition for foreign direct investment,Journal of Public Economics 71, 121-139.


Devereux, M. and  R.Griffith, 1998, Taxes and the location of production: evidence from a panel of US multinationals  Journal of Public Economics 68, 335-367.


Nielsen, S.B. (2013), Transfer pricing: roles and regimes, Working Paper, ECON, CBS, December 20, 2013.


Nielsen, S.B. (2014), Notes on transfer pricing, taxes and incentives.


Huizinga, H. and L. Laeven (2008), International profit shifting within multinationals: A multi-country perspective, Journal of Public Economics 92, 1164-1182.


Fuest, C., C. Spengel, K. Finke, Jost H. Heckemeyer and H. Nusser (2013),

Profit Shifting and “Aggressive” Tax Planning by Multinational Firms: Issues and Options for Reform

World Tax Journal, October 2013, 307-324


Nielsen, S.B., P. Raimondos-Møller, and G. Schjelderup, 2010, " Company taxation and tax spillovers: Separate accounting versus formula apportionment", European Economic Review 54, 121-132.


Devereux, M.P., Loretz, S. (2008) ‘ The effects of EU formula apportionment on corporate tax revenues.’ Fiscal Studies 29, 1-33.

Last updated on 09-10-2015