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Global Sourcing in Industry Equilibrium

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  • Tomohiro Ara

Abstract

type="main"> This paper extends the Antràs and Helpman (2004) model to a continuum of sectors to explore a full set of possibilities for organizational forms in global sourcing. We show that industries of the economy are divided into seven classes of sectors in terms of the prevalence of organizational forms. In particular, the coexistence of different organizational forms is less likely as the sectoral input intensity is more extreme, so that intra-industry heterogeneity is less relevant to the firms' organizational choices. It is also demonstrated that our equilibrium analysis offers a useful framework for examining comparative statics on the sectoral input intensity.

Suggested Citation

  • Tomohiro Ara, 2014. "Global Sourcing in Industry Equilibrium," The Japanese Economic Review, Japanese Economic Association, vol. 65(1), pages 93-115, March.
  • Handle: RePEc:bla:jecrev:v:65:y:2014:i:1:p:93-115
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    File URL: http://hdl.handle.net/10.1111/jere.12010
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    References listed on IDEAS

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    1. Nathan Nunn, 2007. "Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 122(2), pages 569-600.
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    8. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, Oxford University Press, vol. 80(2), pages 190-207.
    9. Tomiura, Eiichi, 2009. "Foreign versus domestic outsourcing: Firm-level evidence on the role of technology," International Review of Economics & Finance, Elsevier, vol. 18(2), pages 219-226, March.
    10. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    11. Andrei A. Levchenko, 2007. "Institutional Quality and International Trade," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 791-819.
    12. Tomiura, Eiichi, 2007. "Foreign outsourcing, exporting, and FDI: A productivity comparison at the firm level," Journal of International Economics, Elsevier, vol. 72(1), pages 113-127, May.
    13. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
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