Multi-Product Firms and Flexible Manufacturing in the Global Economy

Carsten Eckel and J. Peter Neary

The Review of Economic Studies, 2010, vol. 77, issue 1, 188-217

Abstract: We present a new model of multi-product firms (MPFs) and flexible manufacturing, and explore its implications in partial and general oligopolistic equilibrium. Globalization affects the scale and scope (or intensive margin and intra-firm extensive margin) of MPFs through a competition effect and a demand effect. The model highlights a new source of gains from trade: productivity increases as firms become "leaner and meaner", concentrating on their core competence; but also a new source of losses from trade: product variety may fall. Our results also hold under free entry, which allows in addition for adjustment along the traditional inter-firm extensive margin. Copyright , Wiley-Blackwell.

Date: 2010
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Related works:
Working Paper: Multi-product firms and flexible manufacturing in the global economy (2010)
Working Paper: Multi-Product Firms and Flexible Manufacturing in the Global Economy (2006)
Working Paper: Multi-Product Firms and Flexible Manufacturing in the Global Economy (2006)
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