An Elementary Theory of Global Supply Chains

Arnaud Costinot, Jonathan Vogel and Su Wang

No 3402, CESifo Working Paper Series from CESifo

Abstract: This paper develops an elementary theory of global supply chains. We consider a world economy with an arbitrary number of countries, one factor of production, a continuum of intermediate goods, and one final good. Production of the final good is sequential and subject to mistakes. In the unique free trade equilibrium, countries with lower probabilities of making mistakes at all stages specialize in later stages of production. Because of the sequential nature of production, absolute productivity differences are a source of comparative advantage among nations. Using this simple theoretical framework, we offer a first look at how vertical specialization shapes the interdependence of nations.

JEL-codes: F10 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (38)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp3402.pdf (application/pdf)

Related works:
Journal Article: An Elementary Theory of Global Supply Chains (2013)
Working Paper: An Elementary Theory of Global Supply Chains (2011)
Working Paper: An Elementary Theory of Global Supply Chains (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3402

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().