Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94029
Authors: 
Marin, Dalia
Verdier, Thierry
Year of Publication: 
2007
Series/Report no.: 
SFB/TR 15 Discussion Paper 207
Abstract: 
This paper develops a theory which investigates how firms' choice of corporate organization is affecting firm performance and the nature of competition in international markets. We develop a model in which firms' organisational choices determine heterogeneity across firms in size and productivity in the same industry. We then incorporate these organisational choices in a Krugman cum Melitz and Ottaviano model of international trade. We show that the toughness of competition in a market depends on who - headquarters or middle managers - have power in firms. Furthermore, we propose two new margins of trade adjustments: the monitoring margin and the organizational margin. International trade may or may not lead to an increase in aggregate productivity of an industry depending on which of these margins dominate. Trade may trigger firms to opt for organizations which encourage the creation of new ideas and which are less well adapt to price and cost competition.
Subjects: 
international trade with endogenous firm organizations and endogenous toughness of competition
firm heterogeneity
power struggle in the firm
JEL: 
F12
F14
L22
D23
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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