DP5941 Multi-Product Firms and Flexible Manufacturing in the Global Economy
|Author(s):||Carsten Eckel, J Peter Neary|
|Publication Date:||November 2006|
|Keyword(s):||flexible manufacturing, general oligoplistic equilibrium (GOLE), international trade, multi-product firms, product diversity|
|Programme Areas:||International Trade and Regional Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=5941|
We present a new model of multi-product firms (MPFs) and flexible manufacturing and explore its implications in partial and general equilibrium. International trade integration affects the scale and scope of MPFs through a competition effect and a demand effect. We demonstrate how MPFs adjust in the presence of single-product firms and in heterogeneous industries. Our results are in line with recent empirical evidence and suggest that MPFs in conjunction with flexible manufacturing play an important role in the impact of international trade on product diversity.