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An Elementary Theory of Global Supply Chains / Arnaud Costinot, Jonathan Vogel, Su Wang.
- Format:
- Book
- Author/Creator:
- Costinot, Arnaud.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w16936.
- NBER working paper series no. w16936
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2011.
- Summary:
- This paper 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. Because of the sequential nature of production, absolute productivity differences are a source of comparative advantage among nations. Using this simple theoretical framework, we offer a first look at how vertical specialization shapes the interdependence of nations.
- Notes:
- Print version record
- April 2011.
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