Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/22172
Authors: 
Eckel, Carsten
Year of Publication: 
2005
Series/Report no.: 
CeGE discussion paper 45
Abstract: 
This study analyzes the impact of international trade on the diffusion of flexible manufacturing in a general equilibrium framework. Suppliers produce a flexible base product that can be adapted to the specific input requirements of a continuum of downstream industries. The vertical structure is determined by the trade-off between economies of scope in flexible manufacturing and product specificity of in-house production. In this framework, globalization can lead to alternating waves of insourcing and outsourcing, but once the world market reaches a threshold size, outsourcing prevails. We also derive a number of testable predictions with regard to firm size and productivity measures that are in line with recent empirical and casual evidence.
Subjects: 
International Trade
Flexible Manufacturing
Outsourcing
Vertical Integration
Globalization
General Equilibrium
JEL: 
L11
F12
L22
Document Type: 
Working Paper

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