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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/49521
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| Title: | | Global sourcing of complex production processes  |
| Authors: | | Schwarz, Christian Suedekum, Jens |
| Issue Date: | | 2011 |
| Series/Report no.: | | CESifo working paper: Trade Policy 3559 |
| Abstract: | | We develop a theory of a firm in an incomplete contracts environment which decides on its complexity, organization, and global scale. Specifically, the firm decides i) how thinly it wants to slice its production process by choosing the mass of symmetric intermediate inputs that are simultaneously combined to a final product, ii) if the supplier of each component is an external contractor or an integrated affiliate, and iii) if that component is offshored to a foreign country. We also consider the case of asymmetric inputs. Our model leads to a rich set of novel predictions about the structure of multinational firms that are consistent with stylized facts from the recent empirical literature. |
| Subjects: | | multinational firms outsourcing intra-firm trade offshoring vertical FDI |
| JEL: | | F12 D23 L23 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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