Managerial Incentives and the International Organization of Production

Gene Grossman () and Elhanan Helpman

No 3737, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We develop a model in which heterogeneous firms in an industry choose their modes of organization and the location of their subsidiaries or suppliers. We assume that the principals of a firm are constrained in the nature of the contracts they can write with suppliers or employees. Our main result concerns the sorting of firms with different productivity levels into different organizational forms. We use the model to examine the implications of falling trade costs for the relevant prevalence of outsourcing and foreign direct investment.

Keywords: direct foreign investment; outsourcing; theory of the firm (search for similar items in EconPapers)
JEL-codes: D23 F23 L22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ind
Date: Written
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Related works:
Working Paper: Managerial Incentives and the International Organization of Production (2002)
Working Paper: Managerial Incentives and the International Organization of Production (2002)
Working Paper: Managerial Incentives and the International Organization of Production (2002)
Journal Article: Managerial incentives and the international organization of production (2004)
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