Working Papers, Department of Economics, Lund University
Trilateral Trade and Asset Allocation - extending the Grossman-Hart-Moore model
Abstract: This paper extends the Grossman-Hart-Moore model to suite
a specific trilateral trade transaction. In this transaction a downstream
producer produces the final good using inputs from two different upstream
suppliers. Moreover one of the upstream supplier needs an input from the
other upstream supplier for its production. The optimal way to organize
this transaction depend on the characteristics of assets, human capital and
investments. The general finding is that it is more demanding to find a
unique Pareto optimal organization in the trilateral model than in the
bilateral Grossman-Hart-Moore model. This paper also produces a number of
other potentially useful results.
Keywords: Trilateral Trade; Property Rights; Partial Integration; (follow links to similar papers)
JEL-Codes: D23; L23; (follow links to similar papers)
36 pages, December 20, 2007
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