A Coasian Model of International Production Chains

Thibault Fally and Russell Hillberry

No 13062, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: International supply chains require coordination of numerous activities across multiple countries and firms. We adapt a model of supply chains and apply it to an international trade setting. In each chain, the measure of tasks completed within a firm is determined by a tradeoff between transaction costs and diseconomies of scope linked to management of a larger measure of tasks within the firm. The structural parameters that determine firm scope explain variation in supply-chain length and gross-output-to-value-added ratios, and determine countries' comparative advantage along and across supply chains. We calibrate the model to match key observables in East Asia, and evaluate implications of changes in model parameters for trade, welfare, the length of supply chains and countries' relative position within them.

Keywords: Fragmentation of production; Transaction costs; Trade in intermediate goods; Boundary of the firm (search for similar items in EconPapers)
JEL-codes: F10 L23 (search for similar items in EconPapers)
Date: 2018-07
New Economics Papers: this item is included in nep-bec and nep-int
References: Add references at CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
https://cepr.org/publications/DP13062 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: A Coasian model of international production chains (2018)
Working Paper: A Coasian Model of International Production Chains (2017)
Working Paper: A Coasian Model of International Production Chains (2015)
Working Paper: A Coasian Model of International Production Chains (2015)
Working Paper: A Coasian model of international production chains (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:13062

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP13062

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().