Multi-product firms and flexible manufacturing in the global economy

Carsten Eckel and J. Peter Neary

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: We present a new model of multi-product firms (MPFs) and flexible manufacturing, and explore its implications in partial and general oligopolistic equilibrium. Globalization affects the scale and scope (or intensive margin and intra-firm extensive margin) of MPFs through a competition effect and a demand effect. The model highlights a new source of gains from trade: productivity increases as firms become \" leaner and meaner\" , concentrating on their core competence; but also a new source of losses from trade: product variety may fall. Our results also hold under free entry, which allows in addition for adjustment along the traditional inter-firm extensive margin.

Date: 2010
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Citations: View citations in EconPapers (464)

Published in Review of Economic Studies 1 77(2010): pp. 188-217

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Related works:
Journal Article: Multi-Product Firms and Flexible Manufacturing in the Global Economy (2010)
Working Paper: Multi-Product Firms and Flexible Manufacturing in the Global Economy (2006)
Working Paper: Multi-Product Firms and Flexible Manufacturing in the Global Economy (2006)
Working Paper: Multi-product firms and flexible manufacturing in the global economy (2006)
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