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... weighted quadratic form:sΘ ൌ argminΘሼݕሺΘሻ′ W ݕሺΘሻሽs(27)swhere Θsis an estimated set of parameter values.sTo search for the parameters that best fit the model, we employ Nelder-Meanssimplex method (=-=Nelder and Mead, 1965-=-; Lagarias et al. 1998). To further mitigatesoptimization errors, we introduce random variations to the starting values and repeat thesminimization algorithm for a fixed set of artificial and real mom...

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... foreignsmarket: size dispersion, entry and market shocks, and a correlation of these shocks. Forsour estimation strategy, we use simulated method of moments to estimate an optimal setsof parameters (=-=McFadden, 1989-=-; Pakes and Pollard, 1989). We use the theoreticalsimplications of the model to choose a set of four moment conditions: pecking orders5sstrings, affiliate sales distributions across markets, parent sa...

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... size dispersion, entry and market shocks, and a correlation of these shocks. Forsour estimation strategy, we use simulated method of moments to estimate an optimal setsof parameters (McFadden, 1989; =-=Pakes and Pollard, 1989-=-). We use the theoreticalsimplications of the model to choose a set of four moment conditions: pecking orders5sstrings, affiliate sales distributions across markets, parent sales distribution in Japan...

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...”. That is, we assess a model fit by the sample thatsdiffers significantly from the estimation sample along the dimension that the model issmeant to predict and falls outside the support of the data (=-=Keane and Wolpin, 2007-=-). Ifsour 1996 simulations are found reasonable, we can gain further confidence that thesmodel is useful for predicting an impact of changes in FDI barriers on multinationalsactivities.sFigures 6b and...