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Multi-Product Firms and Flexible Manufacturing in the Global Economy

  • Carsten Eckel

    (University of Göttingen)

  • J Peter Neary

    (University College Dublin)

We present a new model of multi-product firms (MPFs) and flexible manufacturing and explore its implications in partial and general equilibrium. International trade integration affects the scale and scope of MPFs through a competition effect and a demand effect. We demonstrate how MPFs adjust in the presence of single-product firms and in heterogeneous industries. Our results are in line with recent empirical evidence and suggest that MPFs in conjunction with flexible manufacturing play an important role in the impact of international trade on product diversity.

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File URL: http://www.ucd.ie/economics/research/papers/2006/WP06.08.pdf
File Function: First version, 2006
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Paper provided by School of Economics, University College Dublin in its series Working Papers with number 200608.

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Length: 37 pages
Date of creation: 05 May 2006
Date of revision:
Handle: RePEc:ucn:wpaper:200608
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Web page: http://www.ucd.ie/economics

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  1. David Weinstein & Christian Broda, 2004. "Globalization and the Gains from Variety," 2004 Meeting Papers 530, Society for Economic Dynamics.
  2. Allanson, Paul & Montagna, Catia, 2005. "Multiproduct firms and market structure: An explorative application to the product life cycle," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 587-597, September.
  3. David P. Myatt & Justin P. Johnson, 2002. "Multiproduct Quality Competition: Fighting Brands and Product Line Pruning," Economics Series Working Papers 105, University of Oxford, Department of Economics.
  4. David P. Myatt & Justin P. Johnson, 2005. "Multiproduct Cournot Oligopoly," Economics Series Working Papers 145, University of Oxford, Department of Economics.
  5. Andrew B. Bernard & Stephen Redding & Peter K. Schott, 2006. "Multi-Product Firms and Trade Liberalization," CEP Discussion Papers dp0769, Centre for Economic Performance, LSE.
  6. NORMAN, George & THISSE, Jacques-François, . "Technology choice and market structure: strategic aspects of flexible manufacturing," CORE Discussion Papers RP -1414, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Eaton, B Curtis & Schmitt, Nicolas, 1994. "Flexible Manufacturing and Market Structure," American Economic Review, American Economic Association, vol. 84(4), pages 875-88, September.
  8. Jiandong Ju, 2003. "Oligopolistic Competition, Technology Innovation, and Multiproduct Firms," Review of International Economics, Wiley Blackwell, vol. 11(2), pages 346-359, 05.
  9. Baldwin, Richard & Ottaviano, Gianmarco, 1998. "Multiproduct Multinationals and Reciprocal FDI Dumping," CEPR Discussion Papers 1851, C.E.P.R. Discussion Papers.
  10. Volker Grossmann, 2003. "Firm Size and Diversification: Asymmetric Multiproduct Firms under Cournot Competition," CESifo Working Paper Series 1047, CESifo Group Munich.
  11. Ottaviano, G.I.P. & Thisse, J.-F., 1999. "Monopolistic Competition, Multiproduct Firms and Optimum Product Diversity," Economics Working Papers eco99/31, European University Institute.
  12. Eckel, Carsten, 2005. "International Trade, Flexible Manufacturing and Outsourcing," Center for European, Governance and Economic Development Research Discussion Papers 45, University of Goettingen, Department of Economics.
  13. Brander, James A & Eaton, Jonathan, 1984. "Product Line Rivalry," American Economic Review, American Economic Association, vol. 74(3), pages 323-34, June.
  14. Gu, Wulong & Baldwin, John R., 2006. "The Impact of Trade on Plant Scale, Production-Run Length and Diversification," Economic Analysis (EA) Research Paper Series 2006038e, Statistics Canada, Analytical Studies Branch.
  15. Eckel, Carsten, 2005. "International Trade, Flexible Manufacturing and Outsourcing," Center for European, Governance and Economic Development Research Discussion Papers 45, University of Goettingen, Department of Economics.
  16. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-28, June.
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