Working Paper Series, UCD Centre for Economic Research 06/08
We present a new model of multi-product firms (MPFs) and flexible manufacturing and explore its implications in partial and general equilibrium. International trade integration a¤ects the scale and scope of MPFs through a competition e¤ect and a demand e¤ect. We demonstrate how MPFs adjust in the presence of single-product rms and in heterogeneous industries. Our results are in line with recent empirical evidence and suggest that MPFs in conjunction with flexible manufacturing play an important role in the impact of international trade on product diversity.
Multi-Product Firms Flexible Manufacturing General Oligoplistic Equilibrium (GOLE) International Trade Product Diversity