Coase Meets Bellman: Dynamic Programming for Production Networks

Tomoo Kikuchi, Kazuo Nishimura, John Stachurski and Junnan Zhang

Papers from arXiv.org

Abstract: We show that competitive equilibria in a range of models related to production networks can be recovered as solutions to dynamic programs. Although these programs fail to be contractive, we prove that they are tractable. As an illustration, we treat Coase's theory of the firm, equilibria in production chains with transaction costs, and equilibria in production networks with multiple partners. We then show how the same techniques extend to other equilibrium and decision problems, such as the distribution of management layers within firms and the spatial distribution of cities.

Date: 2019-08, Revised 2021-05
New Economics Papers: this item is included in nep-dge
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Citations: View citations in EconPapers (4)

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Journal Article: Coase meets Bellman: Dynamic programming for production networks (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:1908.10557

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