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Trilateral Trade and Asset Allocation - extending the Grossman-Hart-Moore model

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  • Rehn, Eric

    () (Department of Economics, Lund University)

Abstract

This paper extends the Grossman-Hart-Moore model to suite a specific trilateral trade transaction. In this transaction a downstream producer produces the final good using inputs from two different upstream suppliers. Moreover one of the upstream supplier needs an input from the other upstream supplier for its production. The optimal way to organize this transaction depend on the characteristics of assets, human capital and investments. The general finding is that it is more demanding to find a unique Pareto optimal organization in the trilateral model than in the bilateral Grossman-Hart-Moore model. This paper also produces a number of other potentially useful results.

Suggested Citation

  • Rehn, Eric, 2007. "Trilateral Trade and Asset Allocation - extending the Grossman-Hart-Moore model," Working Papers 2007:20, Lund University, Department of Economics.
  • Handle: RePEc:hhs:lunewp:2007_020
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    File URL: http://project.nek.lu.se/publications/workpap/Papers/WP07_20.pdf
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    References listed on IDEAS

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    1. Jagdish Bhagwati & T. Srinivasan, 1986. "Religion as DUP activity," Public Choice, Springer, vol. 48(1), pages 49-54, January.
    2. Waldfogel, Joel, 1993. "The Deadweight Loss of Christmas," American Economic Review, American Economic Association, vol. 83(5), pages 1328-1336, December.
    3. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-255, March-Apr.
    4. Hurley, Jeremiah, 2000. "An overview of the normative economics of the health sector," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 2, pages 55-118 Elsevier.
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    More about this item

    Keywords

    Trilateral Trade; Property Rights; Partial Integration;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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