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CM_AE41 - The Firm in a Global Environment *

Faculty
Pascalis Raimondos-Møller
Course Coordinator
Pascalis Raimondos-Møller
Prerequisite/progression of the course
  • Open for exchange students.
  • Closed for students under Open University (Åben Uddannelse).
  • Please note that you cannot choose this course if you're an AEF-student.
  • As a first.year course, the exam in this course cannot be taken as a term paper.
The course builds on knowledge from Microeconomics. Knowledge of International Economics will be helpful.
Course content, structure and teaching
The course focuses on the international opportunities that a firm faces, viz. whether a firm will choose to export, invest abroad, or license its production abroad.
While these types of issues are central in any standard international trade course, the focus in these courses is usually at the country level and thus how trade affects the country in question. Our attempt here is to bring the firm at the forefront of the analysis, and highlight how global opportunities affect firms’ decisions. 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.
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.
Teaching methods
Lectures and discussions in class, exercises.
Course literature
To be announced

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