A Coasian Model of International Production Chains
International supply chains require the coordination of numerous activities across multiple countries and firms. This paper develops a theoretical model of supply chains in which the measure of tasks completed within a firm is determined by paramet...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/10/25124943/coasian-model-international-production-chains http://hdl.handle.net/10986/22856 |
| Summary: | International supply chains require the
coordination of numerous activities across multiple
countries and firms. This paper develops a theoretical model
of supply chains in which the measure of tasks completed
within a firm is determined by parameters that define
transaction costs and the cost of coordinating more
activities within the firm. The structural parameters that
govern these costs explain variation in supply chain length
as well as cross-country variation in
gross-output-to-value-added ratios. The structural
parameters are linked to comparative advantage along and
across supply chains. The paper provides an analytical
treatment of trade and welfare responses to trade cost
change in a simple two-country model. To explore the models
implications in a richer setting, the model is calibrated to
match key observables in East Asia, and the calibrated model
is used to evaluate implications of changes in model
parameters for trade, welfare, the length of supply chains,
and countries relative position within them. |
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