A computable general equilibrium evaluation of market performance after the entry of multinationals

Resumen

This paper offers a detailed analysis about how firms� costs are affected due to the entry of MNEs and how those costs can be related to market performance. We illustrate this by replicating the real data of the intense arrival of MNEs to the Motor vehicles� sector of the Czech Republic before the crisis. In particular, we estimate how technology and costs affect the behaviour of national and multinational enterprises (MNEs) operating in the 20 different sectors in which the Czech economy has been split. The contrasting cost structures of both types of firms across the different sectors are based on real data and have been calibrated in a computable general equilibrium model. Thus, a quantitative assessment for the evolution of factor costs, intermediate costs, production and prices of national firms and MNEs is presented. In addition, the impact on GDP and welfare is also analysed.