Vertical Boundary, Production Organization And Location Choice Of The Firms

The title of this dissertation is "Vertical boundary, Production organization and location choice of the Firms". The paper attempts to unify the institution, technology and factor endowments at the enterprise level, explants that different firms have different choice in vertical boundary, organization and location strategies under the economic globalization. The study is based on new trade theory, incomplete contract theory and new economic geography theory, reveals the microeconomic formation mechanism of the international labor division and the international production network, in order to understand of the formation mechanism in which multi-national corporations and local enterprises have different status in the different types of international production networks. This dissertation has contribution on theoretical studying and reality research.Firstly, the Chapter 3 of this thesis summarizes the globalization trends and the development of contemporary enterprises, gives the definition of the relative conception. In this paper, the nature of globalization is that the production factors and resources can flow easily between countries in the world at large-scale. The rapid development of globalization has an important impact on the development of enterprises. The impact on the firms'boundary is as following:the lateral border of enterprises is expanding, but the vertical boundary is shrinking. The impact on the changes of production organization is as following:Globalization promotes the emergence of international production organization, and the organizational forms have become diversified. The globalization also affects the location choice of the enterprises, they began to choose the production site in the world wide, the developed and developing countries constitute a vertical division and cascade structure of the international production system.Secondly, the chapter 4 investigates a new product cycle in which each firm faces different productivity and endogenous organization. We show that the coexistence of different organizational forms gradually occurs according to a firm's productivity level. In particular, the control of production shifts from integration to non-integration and the location of production shift from a high-wage country to a low-wage country. These shifts occur first within low-productivity firms and then within high-productivity firms. It is also shown that the incompleteness of international contracts plays a significant role in this product cycle.Lastly, the focus of chapter 6 is the location and organization choice of the intermediate firms. The paper constructs a two-region model with heterogeneous firms. We assume there are communication costs between final good company and intermediate good suppliers and additional fixed cost of settling new plant. These two types of costs structure can vary among firms and incur location and organization decision on each firm. The impacts of globalization and the development of technologies on firms'decision are determined by the composite of wage gap, transport costs, communication costs and additional fixed costs. Our result indicates that multi-plant firms and single-plant firms may only coexist under a certain condition. The decreasing of communication costs and transport costs promote the firms to agglomerate their production in a single-plant firm. Furthermore, we show that the first firms choose to become the multi-plant firms are the firms who have the lowest marginal costs and highest fixed costs.