Transaction Cost, Technology Transfer and Mode of Organization

Mandal, Biswajit and Marjit, Sugata (2010): Transaction Cost, Technology Transfer and Mode of Organization.

Abstract

We develop a monopolistically competitive model for a closed economy without contract incompleteness. We show that if superior technology is not allowed to be transferred, integration would be the best mode of organization given that the transaction cost of intermediate input is sufficiently small. However, transferability of technology calls for adding the dimension of factor intensity of input. We then prove that integration could be the better option only when input production technology is capital-intensive. Thus we validate the empirical claim of Antras (2003) from a perspective other than incomplete contract.

• Item Type: MPRA Paper
• Language: English
• Keywords: Transaction Cost, Technology Transfer, Outsourcing, Organization of Production, Intra-firm Trade.
• Subjects: D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior ; Transaction Costs ; Property Rights; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L23 - Organization of Production; F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies ; Fragmentation; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization ; Manufacturing and Service Industries ; Choice of Technology

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