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Trading Under Strategic Self-Constraint: Conceptual Issues and Factual Evidence

In: International Trade and Economic Dynamics

Author

Listed:
  • Henry Wan

    (Cornell University)

Abstract

One of the most important aspects in the current world economy is the rise of microelectronics, which is regarded as a general purpose technology (GPT). In particular, a significant instrument is the application-specific integrated circuits (ASICs). This instrument is supplied by international division of labor, under a novel production relationship, between a few capital-intensive “chip-foundries” and the large pool of “chip-designers”. To exclude itself from chip design, the foundry can avoid conflict of interest with potential chip designers. This behavior is modeled as a problem of mechanism design. It is shown that the commitment of the foundry enhances social welfare.

Suggested Citation

  • Henry Wan, 2009. "Trading Under Strategic Self-Constraint: Conceptual Issues and Factual Evidence," Springer Books, in: Takashi Kamihigashi & Laixun Zhao (ed.), International Trade and Economic Dynamics, pages 203-213, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-78676-4_17
    DOI: 10.1007/978-3-540-78676-4_17
    as

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