A Matching Theory of Global Supply Chains

Yoichi Sugita and 洋一 杉田

No HIAS-E-62, Discussion paper series from Hitotsubashi Institute for Advanced Study, Hitotsubashi University

Abstract: This paper develops a simple general equilibrium model of global supply chains (GSCs) that jointly addresses three key decisions of firms forming GSCs, namely selection (whether to form a GSC), location (where to find GSC partners), and matching (with which firms to form a GSC). The model develops a Becker type assortative matching model of final producers and suppliers both of which are heterogeneous in capability (productivity/quality) of their tasks, and integrates it with a Melitz type model of selection and a Ricardian comparative advantage model of location. The model presents a new mechanism of gains from trade associated with firm heterogeneity. Namely, trade liberalization causes rematching of firms toward positive assortative matching at the world level as a recent empirical study on exporter-importer matching data observes.

Keywords: Global supply chains; firm heterogeneity; two-sided heterogeneity; matching; trade in intermediate goods; quality differentiation (search for similar items in EconPapers)
JEL-codes: F12 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2017-12
New Economics Papers: this item is included in nep-bec and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hiasdp:hias-e-62

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