Suppose there's a firm considering expanding to foreign. The demand it faces at home is P = 9-3Q and the demand at foreign is P = 7-4Q. Given the technology the marginal cost is MC = 1, and the transport cost to move a unit of good across the two countries is t = 1. Fixed cost connected to R&D is F = 3 and the cost of a production plant is Pe = 1. There are no other costs. Calculate the profits if a) the expansion of the firm is through a horizontal multinational and b) if it is through a vertical multinational. What will the firm choose?

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