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Transaction Cost, Technology Transfer and Mode of Organization

  • Mandal, Biswajit
  • Marjit, Sugata

We develop a monopolistically competitive model for a closed economy without contract incompleteness. We show that if superior technology is not allowed to be transferred, integration would be the best mode of organization given that the transaction cost of intermediate input is sufficiently small. However, transferability of technology calls for adding the dimension of factor intensity of input. We then prove that integration could be the better option only when input production technology is capital-intensive. Thus we validate the empirical claim of Antras (2003) from a perspective other than incomplete contract.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23602.

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Date of creation: Feb 2010
Date of revision: Jun 2010
Handle: RePEc:pra:mprapa:23602
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  1. Pack, Howard & Saggi, Kamal, 2001. "Vertical technology transfer via international outsourcing," Journal of Development Economics, Elsevier, vol. 65(2), pages 389-415, August.
  2. Gene M. Grossman & Elhanan Helpman, 2005. "Outsourcing in a Global Economy," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 135-159.
  3. Grossman, Gene M. & Helpman, Elhanan, 2004. "Managerial incentives and the international organization of production," Journal of International Economics, Elsevier, vol. 63(2), pages 237-262, July.
  4. Antras, Pol, 2005. "Property Rights and the International Organization of Production," Scholarly Articles 3196326, Harvard University Department of Economics.
  5. Pol Antràs, 2003. "Firms, Contracts, And Trade Structure," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1375-1418, November.
  6. repec:oup:qjecon:v:118:y:2003:i:4:p:1375-1418 is not listed on IDEAS
  7. Markusen, James R., 1984. "Multinationals, multi-plant economies, and the gains from trade," Journal of International Economics, Elsevier, vol. 16(3-4), pages 205-226, May.
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