T3 Trade versus FDI Learning Materials Problem 3.1 Your firm wants to sell its product in each of several foreign countries, and you must decide whether to do so by exporting or by producing locally for that market through FDI. Suppose that in each country the demand for the product is the same, and is given by: 330 equals 100 minus P where P is the price your firm charges in that country in dollars and Q is the quantity sold there. In addition, the marginal cost of production in any country is the same and is equal to $20 per unit. Wherever you choose to produce, your firm is a monopolist. To produce in a foreign country, your firm must incur a fixed cost equal to $79. On the other hand, to produce in your home country and export to a country that is d miles away requires a transport cost of d/5000dollars per unit shipped. For what range of values of d will your profitmaximizing decision be the export option? The FDI opon