Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Bergen, Department of Economics

No 07/11: Productivity, Size, and the Disintegration of Industrial Production

Jonas Gade Christensen ()
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Jonas Gade Christensen: University of Bergen, Postal: Department of Economics, Fosswinckelsgt. 14, 5007 Bergen, Norway

Abstract: I develop a theoretical model of firms’sourcing decisions along the productivity dimension as in Antrás and Helpman (2004), while also incorporat- ing task trade as in Grossman and Rossi-Hansberg (2008). The combination of these two effects permits a framework for sourcing strategies along two dimensions, which generates results where firms spread the production process of the final good over several different sources simultaneously. While reproducing the results from the aforementioned models, my model contributes refined and more detailed predictions. Testing these on firm-level data for Spanish manufacturing firms, I find strong empirical support for the model's predictions.

Keywords: Outsourcing; Productivity; Production processes

JEL-codes: F21; F23; L23

142 pages, February 2, 2011

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