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Cost Competition, Fragmentation and Globalization Author info | Abstract | Publisher info | Download info | Related research | Statistics Barbara Dluhosch
Michael Burda ()
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This paper proposes a model in which the removal of barriers to trade and factor mobility is associated with endogenous fragmentation of the value-added chain. Fragmentation is the outcome of cost competition _ the profit-maximizing choice of cost structure by monopolistically com-petitive firms. An expansion of the integrated trading area can induce globalization not only in the horizontal dimension associated with love-of-variety preferences, but also in a vertical dimension as firms vary specialization of production stages. While increased trade is likely to in-duce fragmentation when the number of firms is fixed, free entry can either reverse or intensify this result.
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Paper provided by CESifo GmbH in its series CESifo Working Paper Series with number
CESifo Working Paper No. 393.
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Keywords: International trade organization of production technology choice division of labor Other versions of this item:
Article Burda, Michael C & Dluhosch, Barbara, 2002.
"Cost Competition, Fragmentation, and Globalization ,"
Review of International Economics ,
Blackwell Publishing, vol. 10(3), pages 424-41, August.
[Downloadable!] (restricted) Paper Find related papers by JEL classification: F10 - International Economics - - Trade - - - General L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
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