TY  - JOUR
AU  - Dixit,Avinash K.
AU  - Grossman,Gene M.
TI  - Trade and Protection with Multistage Production
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 794
PY  - 1982
Y2  - December 1982
UR  - http://www.nber.org/papers/w0794
L1  - http://www.nber.org/papers/w0794.pdf
N1  - Author contact info:
Avinash Dixit
Department of Economics
Princeton University
Princeton, NJ  08544-1017
E-Mail: dixitak@princeton.edu

Gene M. Grossman
International Economics Section
Department of Economics
Princeton University
Princeton, NJ 08544
Tel: 609/258-4823
Fax: 609/258-1374
E-Mail: grossman@princeton.edu
AB  - This paper analyzes trade in manufactured goods that are produced via a vertical production structure with many stages, where some value is added at each to an intermediate product to yield a good-in-process ready for the next stage. We consider the stage at which a good is traded to be an economically endogenous variable, with comparative advantage determining the pattern of production specialization by stages across countries. We study how endowment changes and policy shifts move the margin of comparative advantage, which thus provides a channel for resource allocation adjustment that is additional to the usual ones of factor substitution and changes in the quantity of output.
ER  -