By Mark Casson

"in the postwar international the most position of the multinational firm has been the foreign diffusion of propriety expertise and managerial talents"

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Extra resources for Alternatives to the Multinational Enterprise

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The benefit to the internal market arising from its access to arbitration reflects the difficulty of 48 Alternatives to the Multinational Enterprise maintaining atomistic competition within any market - whether internal or external - and also the gain from centralising information about quantity response when adjusting price. Internal markets have no need of discriminatory pricing, since any loss on supply is simply a charge on overheads which is fully offset by a surplus on demand. The problems of implementing price discrimination in an external market are threefold.

The problems of implementing price discrimination in an external market are threefold. ) If a transactor is asked about this price there may be either no response or an untruthful response. The analysis of the 'free rider' problem 3 indicates that a transactor who believes that his response will not ultimately influence his opportunity to trade will deliberately understate his reservation demand price and overstate his reservation supply price. Secondly, the enforcement of price discrimination requires restrictions on resale.

However, there is monopoly power up to the limit-price set by the best alternative technology, and because of competition cross-price elasticities of demand between different users are infinite. To simplify the analysis we assume that the product is sold at a uniform price. Factors governing the optimal royalty system may be analysed as follows. 4(a) the industry demand curve is DD'. Under both old and new technology, production is carried on by a large number of small plants. Initially the industry supply curve is S0 S0 ' and industry output is Z.

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