Trade and Protection with Multistage Production
This paper analyzes trade in manufactured goods that are produced via a vertical production structure with many stages, where some value is added at each to an intermediate product to yield a good-in-process ready for the next stage. We consider the stage at which a good is traded to be an economically endogenous variable, with comparative advantage determining the pattern of production specialization by stages across countries. We study how endowment changes and policy shifts move the margin of comparative advantage, which thus provides a channel for resource allocation adjustment that is additional to the usual ones of factor substitution and changes in the quantity of output.
|Date of creation:||Nov 1981|
|Publication status:||published as Dixit, Avinash K. and Gene M. Grossman. "Trade and Protection with Multistage Production." Review of Economic Studies, Vol. 49 (1982), pp.583-594.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
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- Robert D. Waene, 1971. "Intermediate Goods in International Trade with Variable Proportions and Two Primary Inputs," The Quarterly Journal of Economics, Oxford University Press, vol. 85(2), pages 225-236.
- W. M. Corden, 1966. "The Structure of a Tariff System and the Effective Protective Rate," Journal of Political Economy, University of Chicago Press, vol. 74, pages 221-221.
- Pack, Howard, 1976. "The Substitution of Labour for Capital in Kenyan Manufacturing," Economic Journal, Royal Economic Society, vol. 86(341), pages 45-58, March.
- Woodland, A D, 1977. "Joint Outputs, Intermediate Inputs and International Trade Theory," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(3), pages 517-533, October.
- Gene M. Grossman, 1981. "The Theory of Domestic Content Protection and Content Preference," The Quarterly Journal of Economics, Oxford University Press, vol. 96(4), pages 583-603.
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