International Vertical Integration: A Positive Model of Endogenous Structure

Denise Konan

No 199401, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: This paper provides a simple theoretical model in which a vertically-distorted industry structure is considered in an international setting. Fixed costs, existing in both the final good and intermediate good sectors, result in a bilateral externality. Production as well as equity ownership potentially crosses national boundaries. Differing parameter specifications give rise to various market structures as industrial organization is endogenous to the model. As a result, marginal changes in parameter specifications may lead to jumps in plant ownership and location decisions.

JEL-codes: F12 F23 L11 (search for similar items in EconPapers)
Pages: 29 pages
Date: 1994
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