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A Coasian Model of International Production Chains

Thibault Fally () and Russell Hillberry

No 21520, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: International supply chains require coordination of numerous activities across multiple countries and firms. We adapt a model of supply chains and apply it to an international trade setting. In each chain, the measure of tasks completed within a firm is determined by transaction costs and the cost of coordinating more activities within the firm. The structural parameters that govern these costs explain variation in supply-chain length and gross-output-to-value-added ratios, and determine countries' comparative advantage along and across supply chains. We calibrate the model to match key observables in East Asia, and evaluate implications of changes in model parameters for trade, welfare, the length of supply chains and countries' relative position within them.

JEL-codes: F10 L23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-int and nep-sea
Date: 2015-09
Note: ITI
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Published as Thibault Fally & Russell Hillberry, 2018. "A Coasian model of international production chains," Journal of International Economics, .

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Journal Article: A Coasian model of international production chains (2018) Downloads
Working Paper: A Coasian Model of International Production Chains (2018) Downloads
Working Paper: A Coasian Model of International Production Chains (2017) Downloads
Working Paper: A Coasian Model of International Production Chains (2015) Downloads
Working Paper: A Coasian model of international production chains (2015) Downloads
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