Managerial Incentives and the International Organization of Production

Gene Grossman and Elhanan Helpman
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Gene Grossman: Princeton University

No 147, Working Papers from Princeton University, Woodrow Wilson School of Public and International Affairs, Discussion Papers in Economics.

Abstract: We develop a model in which the 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: outsourcing; direct foreign investment; theory of the firm; intra-firm trade (search for similar items in EconPapers)
JEL-codes: L22 F23 D23 (search for similar items in EconPapers)
Date: 2002-12
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Related works:
Journal Article: Managerial incentives and the international organization of production (2004)
Working Paper: Managerial Incentives and the International Organization of Production (2003)
Working Paper: Managerial Incentives and the International Organization of Production (2002)
Working Paper: Managerial Incentives and the International Organization of Production (2002)
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Persistent link: http://EconPapers.repec.org/RePEc:pri:wwseco:147

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