Use two country modelof vertical FDI we developed 10, Wul = following questions. Assume that au...
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Use two country modelof vertical FDI we developed 10, Wul = following questions. Assume that au = 4,0as = 2,0bu = 1,0bs = 10, 20, ws120, wu2 = 1, ws2 = 30, and 7 = 0.1. = a) Find the cost of final good for each of the followings as a function of Tb. 1. The cost of the final good in country 1 if a and b are both made in country 1. 2. The cost of the final good in country 1 if b is made in country 1, shipped to country 2 where a is made, and the final good is shipped to country 1. 3. The cost of the final good in country 2 if a and b are both made in country 2. 4. The cost of the final good in country 2 if b is made in country 1 and shipped to country 2 where a is made. 5. The cost of the final good in country 2 if a and b are both made in country 1 and the final good is shipped to country 2. b) Write the condition that make firm indifferent between complete fragmentation and partial fragmentation. Find the values of 76 for which the firm chooses complete fragmentation. b) Write the condition that make firm indifferent between complete fragmentation and partial fragmentation. Find the values of 76 for which the firm chooses complete fragmentation. Write the condition that make firm indifferent between partial fragmentation and export from country 1. Find the values of 7 for which the firm chooses partial fragmentation. d) What is minimum value of 7 for which complete fragmentation is never optimal, independent of the value of 7b ? Use two country modelof vertical FDI we developed 10, Wul = following questions. Assume that au = 4,0as = 2,0bu = 1,0bs = 10, 20, ws120, wu2 = 1, ws2 = 30, and 7 = 0.1. = a) Find the cost of final good for each of the followings as a function of Tb. 1. The cost of the final good in country 1 if a and b are both made in country 1. 2. The cost of the final good in country 1 if b is made in country 1, shipped to country 2 where a is made, and the final good is shipped to country 1. 3. The cost of the final good in country 2 if a and b are both made in country 2. 4. The cost of the final good in country 2 if b is made in country 1 and shipped to country 2 where a is made. 5. The cost of the final good in country 2 if a and b are both made in country 1 and the final good is shipped to country 2. b) Write the condition that make firm indifferent between complete fragmentation and partial fragmentation. Find the values of 76 for which the firm chooses complete fragmentation. b) Write the condition that make firm indifferent between complete fragmentation and partial fragmentation. Find the values of 76 for which the firm chooses complete fragmentation. Write the condition that make firm indifferent between partial fragmentation and export from country 1. Find the values of 7 for which the firm chooses partial fragmentation. d) What is minimum value of 7 for which complete fragmentation is never optimal, independent of the value of 7b ?
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Related Book For
Business Math
ISBN: 978-0133011203
10th edition
Authors: Cheryl Cleaves, Margie Hobbs, Jeffrey Noble
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