TY  - JOUR
AU  - Helpman,Elhanan
AU  - Grossman,Gene M.
TI  - Managerial Incentives and the International Organization of Production
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9403
PY  - 2002
Y2  - December 2002
UR  - http://www.nber.org/papers/w9403
L1  - http://www.nber.org/papers/w9403.pdf
N1  - Author contact info:
Elhanan Helpman
Department of Economics
Harvard University
1875 Cambridge Street
Cambridge, MA 02138
Tel: 617-495-4690
Fax: 617-495-7730
E-Mail: ehelpman@harvard.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  - We develop a model in which the heterogeneous firms in an industry choose their modes of organization and the location of their subsidiaries or suppliers. We assume that the principals of a firm are constrained in the nature of the contracts they can write with suppliers or employees. Our main result concerns the sorting of firms with different productivity levels into different organizational forms. We use the model to examine the implications of falling trade costs for the relevant prevalence of outsourcing and foreign direct investment.
ER  -