Endogenous Production Networks under Uncertainty

2021 ◽  
Author(s):  
Alexandr Kopytov ◽  
Bineet Mishra ◽  
Kristoffer Nimark ◽  
Mathieu Taschereau-Dumouchel

Econometrica ◽  
2020 ◽  
Vol 88 (1) ◽  
pp. 33-82 ◽  
Author(s):  
Daron Acemoglu ◽  
Pablo D. Azar

We develop a tractable model of endogenous production networks. Each one of a number of products can be produced by combining labor and an endogenous subset of the other products as inputs. Different combinations of inputs generate (prespecified) levels of productivity and various distortions may affect costs and prices. We establish the existence and uniqueness of an equilibrium and provide comparative static results on how prices and endogenous technology/input choices (and thus the production network) respond to changes in parameters. These results show that improvements in technology (or reductions in distortions) spread throughout the economy via input–output linkages and reduce all prices, and under reasonable restrictions on the menu of production technologies, also lead to a denser production network. Using a dynamic version of the model, we establish that the endogenous evolution of the production network could be a powerful force towards sustained economic growth. At the root of this result is the fact that the arrival of a few new products expands the set of technological possibilities of all existing industries by a large amount—that is, if there are n products, the arrival of one more new product increases the combinations of inputs that each existing product can use from 2 n−1 to 2 n , thus enabling significantly more pronounced cost reductions from choice of input combinations. These cost reductions then spread to other industries via lower input prices and incentivize them to also adopt additional inputs.



2017 ◽  
Author(s):  
Daron Acemoglu ◽  
Pablo Azar


2017 ◽  
Author(s):  
Daron Acemoglu ◽  
Pablo Azar




2019 ◽  
Vol 114 (3) ◽  
pp. 101-104 ◽  
Author(s):  
Thomas Friedli ◽  
Günther Schuh ◽  
Gisela Lanza ◽  
Dominik Remling ◽  
Andreas Gützlaff ◽  
...  




2020 ◽  
Author(s):  
Nuriye Melisa Bilgin
Keyword(s):  


Author(s):  
Tim Bartley

Social scientists have theorized the rise of transnational private authority, but knowledge about its consequences remains sparse and fragmented. This chapter builds from a critique of “empty spaces” imagery in several leading paradigms to a new theory of transnational governance. Rules and assurances are increasingly flowing through global production networks, but these flows are channeled and reconfigured by domestic governance in a variety of ways. Abstracting from the case studies in this book, a series of theoretical propositions specify the likely outcomes of private regulation, the influence of domestic governance, the special significance of territory and rights, and several ways in which the content of rules shapes their implementation. As such, this theory proposes an explanation for differences across places, fields, and issues, including the differential performance of labor and environmental standards.



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