Trade and Protection with Multistage Production

Avinash K. Dixit, Gene M. Grossman

Research output: Contribution to journalArticlepeer-review

138 Scopus citations

Abstract

This paper analyses trade in manuf acutured goods that are produced via a vertical production structure with many stages, where some value is added at each to an intermediate product to yield a good-in-process ready for the next stage. We consider the stage at which a good is traded to be an economically endogenous variable, with comparative advantage determining the pattern of production specialization by stages across countries. We study how endowment changes and policy shifts move the margin of comparative advantage, which thus provides a channel for resource allocation adjustment that is additional to the usual ones of factor substitution and changes in the quantity of output.

Original languageEnglish (US)
Pages (from-to)583-594
Number of pages12
JournalReview of Economic Studies
Volume49
Issue number4
DOIs
StatePublished - Oct 1982

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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