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| Author: | Grossman, G.M. Helpman, E. |
| Title: | Managerial incentives and the international organization of production |
| Journal: | Journal of International Economics
2004 : JUL, VOL. 63:2, p. 237-262 |
| Index terms: | Outsourcing Direct investment Foreign investment Theory of the firm Models |
| Freeterms: | FDI Intra-firm trade |
| Language: | eng |
| Abstract: | This paper develops a model in which the heterogeneous firms (hereafter as: f./fs.) in an industry choose their modes of organization and the location of their subsidiaries or suppliers (here as: supps). It is assumed that the principals of a f. are constrained in the nature of the contracts they can write with supps. or employees. Main result concerns the sorting of fs. with different productivity levels into different organizational forms. The model is used to examine the implications of falling trade costs for the relevant prevalence of outsourcing and foreign direct investment (FDI). |
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