On the evolution of the spatial economy with multi-uni-multi-plant firms: the impact of IT development
AbstractThis paper examines how the decline of communication costs between management and production facilities within firms and the decrease in trade costs of manufactured goods affect the spatial organization of a two-region economy with multi-unit-multi-plant firms. The development of information technology decreases the costs of communication and trade costs. Thus, the fragmentation of firms is promoted. Our result indicates that, with decreasing communication costs, firms producing low trade-cost products (such as sonsumer electronic) tend to concentrate their manufacturing plants in low wage countries. In contrast, firms producing high trade-cost products (such as automobiles) tendo to have multiple plants serving to segmented marketes, even in the absence of wage differentials.
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Bibliographic InfoPaper provided by Kyoto University, Institute of Economic Research in its series KIER Working Papers with number 598.
Length: 42 pages
Date of creation: Nov 2004
Date of revision:
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Postal: Yoshida-Honmachi, Sakyo-ku, Kyoto 606-8501
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agglomeration; headquarters; plants; supply chain; re-location; monopolistic competition; information technologies;
Other versions of this item:
- Fujita, Masahisa & Gokan, Toshitaka, 2004. "On the Evolution of the Spatial Economy with Multi-unit/Multi-plant Firms: The Impact of IT Development," IDE Discussion Papers 16, Institute of Developing Economies, Japan External Trade Organization(JETRO).
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
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