1. For each cases a) and b), specify whether the foreign direct investment is horizontal or vertical; in addition, describe whether that investment represents an FDI inflow or outflow from the countries that are mentioned.
a) McDonald's (a US multinational) opens up and operates new restaurants in Europe.
b) Total (a French oil multinational) buys ownership and exploration rights to oil fields in Cameroon.
c) What would the examples above imply for the extent of intra-firm trade. That is, in what industries would a greater proportion of trade occur within firms?
2. If there are internal economies of scale, why would it ever make sense for a firm to produce the same good in more than one production facility?