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Fragmentation in a product cycle model

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  • Hisashi Kurihara

    (Hokkaido Information University)

Abstract

We develop a simple model in which fragmentation, innovation and imitation take in place simultaneously. Firms in North fragment their business into two parts: assembly and services. A reduction in the cost of services to coordinate fragmented businesses between North and South does not enhance fragmentation. On the contrary, the arrival rate of imitation accelerates and that of innovation slows down. Consequently, the life of Northern goods becomes shorter and that of Southern copies becomes longer. We also derive other results to compare to those in Grossman and Helpman (1991) and in Glass and Saggi (2001).

Suggested Citation

  • Hisashi Kurihara, 2005. "Fragmentation in a product cycle model," Economics Bulletin, AccessEcon, vol. 6(4), pages 1-13.
    • Handle: RePEc:ebl:ecbull:eb-05f20001
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    References listed on IDEAS

    as
    1. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders and Product Cycles," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 557-586.
    2. Amy Jocelyn Glass, 2004. "Outsourcing under Imperfect Protection of Intellectual Property," Review of International Economics, Wiley Blackwell, vol. 12(5), pages 867-884, November.
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    Keywords

    Coordinatin Costs;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business

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