Firms’ Internationalisation Strategies: The Evidence

Abstract

It is widely recognised that the pioneering papers of Krugman (1979) and Lancaster (1979) triggered a revolution in the way in which we think about and model international trade. These theoretical insights were in fact motivated by empirical observation, namely intra-industry trade, which appeared to sit oddly with what we would expect in a world where trade patterns are fashioned by differences in factor endowments. The huge literature which these papers triggered yielded new insights into the role of imperfect competition, scale economies and preference diversity in driving trade.