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Contracts and the Division of Labor

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Author Info
Daron Acemoglu
Pol Antrà s
Elhanan Helpman

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Abstract

We develop a tractable framework for the analysis of the relationship between contractual incompleteness, technological complementarities, and technology adoption. In our model a firm chooses its technology and investment levels in contractible activities by suppliers of intermediate inputs. Suppliers then choose investments in noncontractible activities, anticipating payoffs from an ex post bargaining game. We show that greater contractual incompleteness leads to the adoption of less advanced technologies and that the impact of contractual incompleteness is more pronounced when there is greater complementary among the intermediate inputs. We study a number of applications of the main framework and show that the mechanism proposed in the paper can generate sizable productivity differences across countries with different contracting institutions and that differences in contracting institutions lead to endogenous comparative advantage differences.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11356.

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Date of creation: May 2005
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Handle: RePEc:nbr:nberwo:11356

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Find related papers by JEL classification:
D2 - Microeconomics - - Production and Organizations
J2 - Labor and Demographic Economics - - Demand and Supply of Labor
L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
O3 - Economic Development, Technological Change, and Growth - - Technological Change

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References listed on IDEAS
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.:
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    Other versions:
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  4. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  23. repec:rus:hseeco:122439 is not listed on IDEAS
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Cited by:
(explanations, 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.)

  1. Pfeiffer, Friedhelm, 2005. "Existenzgründungen: Ein Weg zur Beschäftigungsförderung? (Firm foundation * a way to enhance employment?)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(2/3), pages 325-340. [Downloadable!]
  2. Marin, Dalia, 2006. "A New International Division of Labour in Europe: Outsourcing and Offshoring to Eastern Europe," CEPR Discussion Papers 5447, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Macchiavello, Rocco, 2007. "Financial Constraints and the Costs and Benefits of Vertical Integration," CEPR Discussion Papers 6104, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  4. Raouf Boucekkine & Patricia Crifo & Claudio Mattalia, 2008. "Technological Progress, Organizational Change and the Size of the Human Resources Department," Working Papers hal-00240715_v1, HAL. [Downloadable!]
    Other versions:
  5. Marin, Dalia, 2005. "A New International Division of Labor in Europe: Offshoring and Outsourcing to Eastern Europe," Discussion Papers in Economics 714, University of Munich, Department of Economics. [Downloadable!]
  6. Daron Acemoglu & Pol Antràs & Elhanan Helpman, 2007. "Contracts and Technology Adoption," American Economic Review, American Economic Association, vol. 97(3), pages 916-943, June. [Downloadable!]
  7. Pfeiffer, Friedhelm, 2005. "Existenzgründungen: Ein Weg zur Beschäftigungsförderung?," ZEW Discussion Papers 05-71, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  8. Nathan Nunn, 2005. "Relationship Specificity, Incomplete Contracts and the Pattern of Trade," International Trade 0512018, EconWPA. [Downloadable!]
    Other versions:
  9. Raouf Boucekkine & Patricia Criffo & Claudio Mattalia, 2008. "Technological progress, organizational change and the size of the Human Resources Department," Working Papers 2008_20, Department of Economics, University of Glasgow. [Downloadable!]
    Other versions:
  10. Arnaud Costinot, 2007. "On the Origins of Comparative Advantage," University of California at San Diego, Economics Working Paper Series 2008-06, Department of Economics, UC San Diego. [Downloadable!]
    Other versions:
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