An Elementary Theory of Global Supply Chains
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Costinot_An elementary.pdf
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397.01 KB
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Adobe PDF
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Author(s)
Costinot, Arnaud
Wang, Su
Vogel, Jonathan
Date Issued
May 2012
Journal
The Review of Economic Studies
Publisher
Oxford University Press
Citation
Costinot, A., J. Vogel, and S. Wang. “An Elementary Theory of Global Supply Chains.” The Review of Economic Studies 80, no. 1 (February 7, 2013): 109-144.
Version
Author's final manuscript
Abstract
This article develops an elementary theory of global supply chains. We consider a world economy with an arbitrary number of countries, one factor of production, a continuum of intermediate goods and one final good. Production of the final good is sequential and subject to mistakes. In the unique free trade equilibrium, countries with lower probabilities of making mistakes at all stages specialize in later stages of production. Using this simple theoretical framework, we offer a first look at how vertical specialization shapes the interdependence of nations.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike 3.0
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DOI of Published Version
https://doi.org/10.1093/restud/rds023
