Global Sourcing in Industry Equilibrium

Tomohiro Ara

The Japanese Economic Review, 2014, vol. 65, issue 1, 93-115

Abstract: type="main">

This paper extends the Antràs and Helpman (2004) model to a continuum of sectors to explore a full set of possibilities for organizational forms in global sourcing. We show that industries of the economy are divided into seven classes of sectors in terms of the prevalence of organizational forms. In particular, the coexistence of different organizational forms is less likely as the sectoral input intensity is more extreme, so that intra-industry heterogeneity is less relevant to the firms' organizational choices. It is also demonstrated that our equilibrium analysis offers a useful framework for examining comparative statics on the sectoral input intensity.

Date: 2014
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