Description:
I develop a quantitative model of trade and MP that allows for a complete range of multinational activities, including selling only in the host country (horizontal FDI), selling only in the country of origin (vertical FDI), and selling to third-party countries (export platform FDI). Using the model and the available data, I bound outcomes, such as welfare, from various counterfactual scenarios without imposing specific assumptions about multinationals. As a theoretical matter, I prove that, for any country, gains from openness are at a maximum with horizontal FDI and at a minimum with vertical FDI. Empirical results show that a wide range of outcomes are consistent with the data. While the incompleteness of the data leaves open a wide range of outcomes, I show an example where the data available can still brings a clear judgment on a policy