Optimal fragmentation in monopolistically competitive industries
2012 (English)In: The annals of regional science, ISSN 0570-1864, E-ISSN 1432-0592, Vol. 48, no 1, 1-32 p.Article in journal (Refereed) Published
Trade in intermediate goods necessitates the viewpoint that final goods are received through a sequential process of production. In this paper, we explore the role of vertical and horizontal complementarities in production and the effects of such complementarities on the level of fragmentation in production. We analyze the optimal level of fragmentation. Using a production chain point of view in a basic monopolistically competitive model allows us to derive analytical results regarding the level of fragmentation, both vertically and horizontally. As the economy grows, our model indicates an increasing level of roundaboutness in production. We also study forces for vertical specialization between countries by extending our framework into a two-country setting.
Place, publisher, year, edition, pages
2012. Vol. 48, no 1, 1-32 p.
Transport Systems and Logistics
IdentifiersURN: urn:nbn:se:kth:diva-71397DOI: 10.1007/s00168-010-0413-5ISI: 000300894500001ScopusID: 2-s2.0-84855908654OAI: oai:DiVA.org:kth-71397DiVA: diva2:486728
FunderTrenOp, Transport Research Environment with Novel Perspectives
TSC import 326 2012-01-30. QC 201202012012-01-312012-01-312013-04-10Bibliographically approved