Factor price frontiers with international fragmentation of multistage production

Wilhelm Kohler
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Wilhelm Kohler: Johannes-Kepler Universitat Linz

No 126, Royal Economic Society Annual Conference 2003 from Royal Economic Society

Abstract: This paper investigates international fragmentation in a modeling framework where the multi-stage nature of industrial production is made explicitly, and where the engineering sequence of stages is juxtaposed with a sequence of increasing economic incentive for international fragmentation. Assuming that there are two tradable goods sectors, a multi-stage sector amenable to international fragmentation and a standard sector where production is always fully integrated in the domestic economy, I first explore the nature and shape of the domestic factor price frontier, endogenously determining the margin of international fragmentation under given world prices for the two goods. I then explore the consequences of an exogenous change in the terms of trade on the margin of international fragmentation, and the implications of a fall in the cost of transport and communication that facilitates an increasing degree of international fragmentation.

Keywords: international fragmentation; multi-stage production; factor price frontiers (search for similar items in EconPapers)
JEL-codes: D33 F11 F15 F23 (search for similar items in EconPapers)
Date: 2003-06-04
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ecj:ac2003:126

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