International Research Seminar "Study of vertical integration in international trade". Presentation by Anders Laugesen.

On December 05, 2012, at 12:00 MSSE was held a public research seminar. Report on the theme "A Simple Theory of Trade and Vertical Integration" by Anders Laugesen (Aarhus University).

A. Laugesen

On December 04, 2012, 12:00 - 14:00.
Public Research seminar.
Anders Laugesen (Aarhus University). "Complementary Activities, Heterogeneous Firms, and Industry Structure".

We build a three-country model of international trade in final and intermediate goods where firms are heterogeneous with respect to productivity. Final- and intermediate-good producers engage in bilateral relationships that are governed by incomplete contracts. In this setup, we explore the implications of a firm-level complementarity between vertical integration, offshoring, and exporting. Offshoring to the low-wage South through foreign outsourcing or vertical foreign direct investments is lucrative for the most productive firms. Exporting is also lucrative for the most productive firms. We show how the presence of complementarities affects the industry equilibria through the prevalence of vertical integration, offshoring, and exporting across a continuum of industries. The main points of this paper are that open-economy issues matter for the determination of firm boundaries and that trade liberalisation may spur a wave of vertical M&As.

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A.Laugesen. A simple theory...

The address of the seminar: b. 47, pr. Rimskogo-Korsakova (building of the bank "Saint-Petersburg bank", conference hall, 3rd floor), Saint Petersburg.

Web-page of the international research seminars "Study of vertical integration in international trade"...