International Vertical Specializations, Imperfect Competition and Welfare
AbstractThis Paper looks at the impact of international vertical specialization when the final good industry is imperfectly competitive. Final goods are assembled out of different fragments. In the absence of international vertical specialization all fragments required to produce a given final good must be produced in the same country. International vertical specialization unambiguously reduces the costs of production of all final good producers, albeit not necessarily in the same proportion. If the cost of production of a less efficient producer is reduced to a lesser extent than that of a more efficient producer, vertical specialization may lead to exit in the final good industry. This anti-competitive effect may be strong enough that international vertical specialization leads to a Pareto inferior outcome. On the other hand, we can characterize two sets of policies, which, combined with vertical specialization, are Pareto improving compared to autarky regardless of consumer preferences and of the form of competition in the final good industry.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4311.
Date of creation: Mar 2004
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fujita, Masahisa & Thisse, Jacques-Francois, 2004.
"Globalization and the Evolution of the Supply Chain: who gains and who loses?,"
IDE Discussion Papers
5, Institute of Developing Economies, Japan External Trade Organization(JETRO).
- Masahisa Fujita & Jacques-François Thisse, 2006. "Globalization And The Evolution Of The Supply Chain: Who Gains And Who Loses?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(3), pages 811-836, 08.
- Fujita, Masahisa & Thisse, Jacques-François, 2003. "Globalization and the Evolution of the Supply Chain: Who Gains and Who Loses?," CEPR Discussion Papers 4152, C.E.P.R. Discussion Papers.
- FUJITA, Masahisa & THISSE, Jacques, 2003. "Globalization and the evolution of the supply chain: who gains and who loses ?," CORE Discussion Papers 2003074, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Masahisa Fujita & Jacques-Francois Thisse, 2003. "Globalization and the Evolution of the Supply Chain: who gains and who loses?," KIER Working Papers 571, Kyoto University, Institute of Economic Research.
- FUJITA, Masahisa & THISSE, Jacques-François, . "Globalisation and the evolution of the supply chain: who gains and who loses?," CORE Discussion Papers RP -1968, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Yongmin Chen & Jota Ishikawa & Zhihao Yu, 2002.
"Trade Liberalization and Strategic Outsourcing,"
Carleton Economic Papers
02-12, Carleton University, Department of Economics, revised Jul 2004.
- Francois, Patrick & van Ypersele, Tanguy, 2002. "On the protection of cultural goods," Journal of International Economics, Elsevier, vol. 56(2), pages 359-369, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.