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...

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Main Authors:	Fally, Thibault, Hillberry, Russell
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2015
Subjects:	GROWTH RATES HARMONIZATION EXOGENOUS SUPPLY PARTICULAR COUNTRY AVERAGE COSTS MARKET STRUCTURE RAPID ECONOMIC GROWTH PRODUCTION MULTIPLIERS STRUCTURAL CHANGE INCOME INTEREST PERFECT COMPETITION MARGINAL COST BENCHMARK EQUILIBRIUM EXCHANGE CHANGES IN TRADE GDP PER CAPITA EXPORTS ELASTICITY TRADE FLOWS POLITICAL ECONOMY EXPORTERS MARKET SIZE WELFARE OPTIMIZATION CROSS-BORDER TRANSACTIONS OUTPUT RATIO ECONOMIC POLICY EQUILIBRIUM VARIABLES ASYMMETRIC INFORMATION PRICE BENCHMARKS INPUTS RETURNS TO SCALE PAYMENTS BANKRUPTCY TRANSACTION COST FREE TRADE TRENDS TRADE AGREEMENTS FINAL GOODS INPUT- OUTPUT TABLES DOMESTIC CONSUMPTION GROSS EXPORTS LABOR MARKET TRADE BALANCE ELECTRONICS INDUSTRY GLOBAL ECONOMY COSTS PER CAPITA INCOME CONTRACT ENFORCEMENT RESERVE BANK CONSTANT RETURNS TO SCALE OUTPUTS SPECIALIZATION PRODUCTIVITY GLOBALIZATION INSOLVENCY PROCEEDINGS CROSS- BORDER TRANSACTIONS ACCESS TRADE MODELS TOTAL COSTS WELFARE GAINS MIDDLE-INCOME COUNTRIES TRADE POLICY ELASTICITY OF SUBSTITUTION GENERAL EQUILIBRIUM MODEL GRAVITY EQUATION PATTERN OF TRADE BORDER TRADE PRODUCTIVITY GROWTH CONSUMPTION FEDERAL RESERVE VALUE ADDED UNIT OF LABOR INTERNATIONAL PRODUCTION FEDERAL RESERVE BANK WAGES ECONOMIC OUTCOMES INTERNATIONAL TRADE TRANSPARENCY TRADABLE GOODS BARRIERS TRADE COSTS MARKET CONDITIONS FUTURE VALUE ELASTICITY OF TRADE MACROECONOMICS DEMAND MARGINAL COSTS INTERMEDIATE GOODS EXCESS DEMAND CONSUMERS INCOMES INPUT-OUTPUT TABLES EQUATIONS MEASUREMENT SHARES OPENNESS ABSOLUTE ADVANTAGE FOREIGN VALUE GROSS OUTPUT TRANSACTION COSTS COST REDUCTION BENCHMARK WORLD TRADING SYSTEM TERMS OF TRADE OUTPUT ENFORCEMENT TRADE DATA ECONOMIC DEVELOPMENT MANUFACTURING INDUSTRIES TRADE GDP GOODS THEORY TRADING SYSTEM BILATERAL TRADE VERTICAL SPECIALIZATION SHARE COMPARATIVE ADVANTAGE INPUT TRADE SUPPLY CROSS-BORDER TRANSACTION COUNTERFACTUAL SIMULATIONS WORLD TRADE FOREIGN LABOR UNDERESTIMATES COMMODITIES AVERAGE PRODUCTIVITY TRANSPORT COSTS PRICE INDEX LABOR MARKETS OUTCOMES COMMODITY OUTSOURCING PRICES PRODUCTION COSTS DEVELOPMENT POLICY COMPETITION
Online Access:	http://documents.worldbank.org/curated/en/2015/10/25124943/coasian-model-international-production-chains http://hdl.handle.net/10986/22856

id	okr-10986-22856
recordtype	oai_dc
spelling	okr-10986-228562021-04-23T14:04:11Z A Coasian Model of International Production Chains Fally, Thibault Hillberry, Russell GROWTH RATES HARMONIZATION EXOGENOUS SUPPLY PARTICULAR COUNTRY AVERAGE COSTS MARKET STRUCTURE RAPID ECONOMIC GROWTH PRODUCTION MULTIPLIERS STRUCTURAL CHANGE INCOME INTEREST PERFECT COMPETITION MARGINAL COST BENCHMARK EQUILIBRIUM EXCHANGE CHANGES IN TRADE GDP PER CAPITA EXPORTS ELASTICITY TRADE FLOWS POLITICAL ECONOMY EXPORTERS MARKET SIZE WELFARE OPTIMIZATION CROSS-BORDER TRANSACTIONS OUTPUT RATIO ECONOMIC POLICY EQUILIBRIUM VARIABLES ASYMMETRIC INFORMATION PRICE BENCHMARKS INPUTS RETURNS TO SCALE PAYMENTS BANKRUPTCY TRANSACTION COST FREE TRADE TRENDS TRADE AGREEMENTS FINAL GOODS INPUT- OUTPUT TABLES DOMESTIC CONSUMPTION GROSS EXPORTS LABOR MARKET TRADE BALANCE ELECTRONICS INDUSTRY GLOBAL ECONOMY COSTS PER CAPITA INCOME CONTRACT ENFORCEMENT RESERVE BANK CONSTANT RETURNS TO SCALE OUTPUTS SPECIALIZATION PRODUCTIVITY GLOBALIZATION INSOLVENCY PROCEEDINGS CROSS- BORDER TRANSACTIONS ACCESS TRADE MODELS TOTAL COSTS WELFARE GAINS MIDDLE-INCOME COUNTRIES TRADE POLICY ELASTICITY OF SUBSTITUTION GENERAL EQUILIBRIUM MODEL GRAVITY EQUATION PATTERN OF TRADE BORDER TRADE PRODUCTIVITY GROWTH CONSUMPTION FEDERAL RESERVE VALUE ADDED UNIT OF LABOR INTERNATIONAL PRODUCTION FEDERAL RESERVE BANK WAGES ECONOMIC OUTCOMES INTERNATIONAL TRADE TRANSPARENCY TRADABLE GOODS BARRIERS TRADE COSTS MARKET CONDITIONS FUTURE VALUE ELASTICITY OF TRADE MACROECONOMICS DEMAND MARGINAL COSTS INTERMEDIATE GOODS EXCESS DEMAND CONSUMERS INCOMES INPUT-OUTPUT TABLES EQUATIONS MEASUREMENT SHARES OPENNESS ABSOLUTE ADVANTAGE FOREIGN VALUE GROSS OUTPUT TRANSACTION COSTS COST REDUCTION BENCHMARK WORLD TRADING SYSTEM TERMS OF TRADE OUTPUT ENFORCEMENT TRADE DATA ECONOMIC DEVELOPMENT MANUFACTURING INDUSTRIES TRADE GDP GOODS THEORY TRADING SYSTEM BILATERAL TRADE VERTICAL SPECIALIZATION SHARE COMPARATIVE ADVANTAGE INPUT TRADE SUPPLY CROSS-BORDER TRANSACTION COUNTERFACTUAL SIMULATIONS WORLD TRADE FOREIGN LABOR UNDERESTIMATES COMMODITIES AVERAGE PRODUCTIVITY TRANSPORT COSTS PRICE INDEX LABOR MARKETS OUTCOMES COMMODITY OUTSOURCING PRICES PRODUCTION COSTS DEVELOPMENT POLICY COMPETITION 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. 2015-11-05T14:38:40Z 2015-11-05T14:38:40Z 2015-10 Working Paper http://documents.worldbank.org/curated/en/2015/10/25124943/coasian-model-international-production-chains http://hdl.handle.net/10986/22856 English en_US Policy Research Working Paper;No. 7434 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	GROWTH RATES HARMONIZATION EXOGENOUS SUPPLY PARTICULAR COUNTRY AVERAGE COSTS MARKET STRUCTURE RAPID ECONOMIC GROWTH PRODUCTION MULTIPLIERS STRUCTURAL CHANGE INCOME INTEREST PERFECT COMPETITION MARGINAL COST BENCHMARK EQUILIBRIUM EXCHANGE CHANGES IN TRADE GDP PER CAPITA EXPORTS ELASTICITY TRADE FLOWS POLITICAL ECONOMY EXPORTERS MARKET SIZE WELFARE OPTIMIZATION CROSS-BORDER TRANSACTIONS OUTPUT RATIO ECONOMIC POLICY EQUILIBRIUM VARIABLES ASYMMETRIC INFORMATION PRICE BENCHMARKS INPUTS RETURNS TO SCALE PAYMENTS BANKRUPTCY TRANSACTION COST FREE TRADE TRENDS TRADE AGREEMENTS FINAL GOODS INPUT- OUTPUT TABLES DOMESTIC CONSUMPTION GROSS EXPORTS LABOR MARKET TRADE BALANCE ELECTRONICS INDUSTRY GLOBAL ECONOMY COSTS PER CAPITA INCOME CONTRACT ENFORCEMENT RESERVE BANK CONSTANT RETURNS TO SCALE OUTPUTS SPECIALIZATION PRODUCTIVITY GLOBALIZATION INSOLVENCY PROCEEDINGS CROSS- BORDER TRANSACTIONS ACCESS TRADE MODELS TOTAL COSTS WELFARE GAINS MIDDLE-INCOME COUNTRIES TRADE POLICY ELASTICITY OF SUBSTITUTION GENERAL EQUILIBRIUM MODEL GRAVITY EQUATION PATTERN OF TRADE BORDER TRADE PRODUCTIVITY GROWTH CONSUMPTION FEDERAL RESERVE VALUE ADDED UNIT OF LABOR INTERNATIONAL PRODUCTION FEDERAL RESERVE BANK WAGES ECONOMIC OUTCOMES INTERNATIONAL TRADE TRANSPARENCY TRADABLE GOODS BARRIERS TRADE COSTS MARKET CONDITIONS FUTURE VALUE ELASTICITY OF TRADE MACROECONOMICS DEMAND MARGINAL COSTS INTERMEDIATE GOODS EXCESS DEMAND CONSUMERS INCOMES INPUT-OUTPUT TABLES EQUATIONS MEASUREMENT SHARES OPENNESS ABSOLUTE ADVANTAGE FOREIGN VALUE GROSS OUTPUT TRANSACTION COSTS COST REDUCTION BENCHMARK WORLD TRADING SYSTEM TERMS OF TRADE OUTPUT ENFORCEMENT TRADE DATA ECONOMIC DEVELOPMENT MANUFACTURING INDUSTRIES TRADE GDP GOODS THEORY TRADING SYSTEM BILATERAL TRADE VERTICAL SPECIALIZATION SHARE COMPARATIVE ADVANTAGE INPUT TRADE SUPPLY CROSS-BORDER TRANSACTION COUNTERFACTUAL SIMULATIONS WORLD TRADE FOREIGN LABOR UNDERESTIMATES COMMODITIES AVERAGE PRODUCTIVITY TRANSPORT COSTS PRICE INDEX LABOR MARKETS OUTCOMES COMMODITY OUTSOURCING PRICES PRODUCTION COSTS DEVELOPMENT POLICY COMPETITION
spellingShingle	GROWTH RATES HARMONIZATION EXOGENOUS SUPPLY PARTICULAR COUNTRY AVERAGE COSTS MARKET STRUCTURE RAPID ECONOMIC GROWTH PRODUCTION MULTIPLIERS STRUCTURAL CHANGE INCOME INTEREST PERFECT COMPETITION MARGINAL COST BENCHMARK EQUILIBRIUM EXCHANGE CHANGES IN TRADE GDP PER CAPITA EXPORTS ELASTICITY TRADE FLOWS POLITICAL ECONOMY EXPORTERS MARKET SIZE WELFARE OPTIMIZATION CROSS-BORDER TRANSACTIONS OUTPUT RATIO ECONOMIC POLICY EQUILIBRIUM VARIABLES ASYMMETRIC INFORMATION PRICE BENCHMARKS INPUTS RETURNS TO SCALE PAYMENTS BANKRUPTCY TRANSACTION COST FREE TRADE TRENDS TRADE AGREEMENTS FINAL GOODS INPUT- OUTPUT TABLES DOMESTIC CONSUMPTION GROSS EXPORTS LABOR MARKET TRADE BALANCE ELECTRONICS INDUSTRY GLOBAL ECONOMY COSTS PER CAPITA INCOME CONTRACT ENFORCEMENT RESERVE BANK CONSTANT RETURNS TO SCALE OUTPUTS SPECIALIZATION PRODUCTIVITY GLOBALIZATION INSOLVENCY PROCEEDINGS CROSS- BORDER TRANSACTIONS ACCESS TRADE MODELS TOTAL COSTS WELFARE GAINS MIDDLE-INCOME COUNTRIES TRADE POLICY ELASTICITY OF SUBSTITUTION GENERAL EQUILIBRIUM MODEL GRAVITY EQUATION PATTERN OF TRADE BORDER TRADE PRODUCTIVITY GROWTH CONSUMPTION FEDERAL RESERVE VALUE ADDED UNIT OF LABOR INTERNATIONAL PRODUCTION FEDERAL RESERVE BANK WAGES ECONOMIC OUTCOMES INTERNATIONAL TRADE TRANSPARENCY TRADABLE GOODS BARRIERS TRADE COSTS MARKET CONDITIONS FUTURE VALUE ELASTICITY OF TRADE MACROECONOMICS DEMAND MARGINAL COSTS INTERMEDIATE GOODS EXCESS DEMAND CONSUMERS INCOMES INPUT-OUTPUT TABLES EQUATIONS MEASUREMENT SHARES OPENNESS ABSOLUTE ADVANTAGE FOREIGN VALUE GROSS OUTPUT TRANSACTION COSTS COST REDUCTION BENCHMARK WORLD TRADING SYSTEM TERMS OF TRADE OUTPUT ENFORCEMENT TRADE DATA ECONOMIC DEVELOPMENT MANUFACTURING INDUSTRIES TRADE GDP GOODS THEORY TRADING SYSTEM BILATERAL TRADE VERTICAL SPECIALIZATION SHARE COMPARATIVE ADVANTAGE INPUT TRADE SUPPLY CROSS-BORDER TRANSACTION COUNTERFACTUAL SIMULATIONS WORLD TRADE FOREIGN LABOR UNDERESTIMATES COMMODITIES AVERAGE PRODUCTIVITY TRANSPORT COSTS PRICE INDEX LABOR MARKETS OUTCOMES COMMODITY OUTSOURCING PRICES PRODUCTION COSTS DEVELOPMENT POLICY COMPETITION Fally, Thibault Hillberry, Russell A Coasian Model of International Production Chains
relation	Policy Research Working Paper;No. 7434
description	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.
format	Working Paper
author	Fally, Thibault Hillberry, Russell
author_facet	Fally, Thibault Hillberry, Russell
author_sort	Fally, Thibault
title	A Coasian Model of International Production Chains
title_short	A Coasian Model of International Production Chains
title_full	A Coasian Model of International Production Chains
title_fullStr	A Coasian Model of International Production Chains
title_full_unstemmed	A Coasian Model of International Production Chains
title_sort	coasian model of international production chains
publisher	World Bank, Washington, DC
publishDate	2015
url	http://documents.worldbank.org/curated/en/2015/10/25124943/coasian-model-international-production-chains http://hdl.handle.net/10986/22856
_version_	1764452244250427392

A Coasian Model of International Production Chains

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