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Multiplant strategy under core-periphery structure

  • Tsubota, Kenmei
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    A typical implicit assumption on monopolistic competition models for trade and economic geography is that firms can produce and sell only at one place. This paper fallows endogenous determination of the number of plants in a new economic geography model and examine the stable outcomes of organization choice between single-plant and multi-plant in two regions. We explicitly consider the firms' trade-off between larger economies of scale under single plant configuration and the saving in interregional transport costs under multi-plant configuration. We show that organization change arises under decreasing transportation costs and observe several organization configurations under a generalized cost function.

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    File URL: http://ir.ide.go.jp/dspace/bitstream/2344/1138/1/ARRIDE_Discussion_No.346_tsubota.pdf
    File Function: First version, 2012
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    Paper provided by Institute of Developing Economies, Japan External Trade Organization(JETRO) in its series IDE Discussion Papers with number 346.

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    Date of creation: Mar 2012
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    Publication status: Published in IDE Discussion Paper. No. 346. 2012.3
    Handle: RePEc:jet:dpaper:dpaper346
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    1. Fujita, Masahisa & Mori, Tomoya & Henderson, J. Vernon & Kanemoto, Yoshitsugu, 2004. "Spatial distribution of economic activities in Japan and China," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 65, pages 2911-2977 Elsevier.
    2. Eiichi Tomiura, 2005. "Foreign Outsourcing, Exporting, and FDI: A Productivity Comparison at the Firm Level," Discussion Paper Series 168, Research Institute for Economics & Business Administration, Kobe University.
    3. TOULEMONDE, Eric, . "Multinationals: Too many or too few? The proximity-concentration trade-off," CORE Discussion Papers RP -2044, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Ota, Mitsuru & Fujita, Masahisa, 1993. "Communication technologies and spatial organization of multi-unit firms in metropolitan areas," Regional Science and Urban Economics, Elsevier, vol. 23(6), pages 695-729, December.
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