Collaboration in Technology and Multinational Production — Sophia Praetorius

Sprecherin

Sophia Praetorius (University of Geneva)

Abstract

How does assembly technology and its sharing affect global production choices? To answer this question, I incorporate production technology choices into a structural multinational production model and allow for collaboration in specialized assembly assets across firms when choosing the optimal production locations for their varieties. I find that both the technology choice itself and the potential sharing of it have important effects on the expected cost and profits of firms, shaping the global allocation of production. Accounting for explicit production technology raises the median firm's cost of serving a market by 24.84% compared to traditional models that do not incorporate such production technologies explicitly. On the other hand, I find that firms can ease these production constraints through licensing, granting them larger flexibility of production, reducing their cost by 12.21%. Importantly, the model allows, in addition to analyzing trade policy shocks, to investigate industrial policies that explicitly target the access to production technologies. While a unilateral export or import ban of specific technologies can have similar reallocative impacts as comparable tariff increases, the distributional consequences are different and largely borne by individual firms.

Raum

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