Modularity and the Organization of International Production
In many globalized industries, vertical outsourcing seems to co-evolve with horizontal integration in the component sector. In order to account for this phenomenon, I incorporate modularity into an industry-equilibrium model with monopolistic competition and perfect contracts that allows the organization of the firm to be endogenous in both the vertical and horizontal dimensions of production. The model illustrates that the co-evolution is most likely to occur in industries with modular product architectures and high increasing returns to scale in the intermediate good sector. This paper also provides a theoretical legitimation of Stigler's contentious conjecture that firm production structures become vertically disintegrated as an industry expands.
|Date of creation:||Nov 2003|
|Contact details of provider:|| Postal: 1601 East-West Road, Honolulu, Hawaii 96848|
Phone: (808) 944-7560
Fax: (808) 944-7399
Web page: http://eastwestcenter.org/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ewc:wpaper:wp65. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Brenda Higashimoto)
If references are entirely missing, you can add them using this form.