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2014 | OriginalPaper | Buchkapitel

4. Transaction Cost, Technology Transfer, and Mode of Organization

verfasst von : Biswajit Mandal, Sugata Marjit

Erschienen in: Trade, Globalization and Development

Verlag: Springer India

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Abstract

We develop a monopolistically competitive model for a closed economy without contract incompleteness. We show that if superior technology is not allowed to be transferred, integration would be the best mode of organization given that the transaction cost of intermediate input is not sufficiently small. However, transferability of technology calls for adding the dimension of factor intensity of input. We then prove that integration could be the better option only when input production technology is capital intensive. Thus, we validate the empirical claim of Antras (2003) from a perspective other than incomplete contract.

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Cost of corruption can also be considered as a part of transaction costs. Nevertheless, the essence of the arguments will remain same.

ϕ(β) essentially signifies the cost associated with technology transfer which, in turn, is a function of ratio of factors used. Hence, variable cost of production is influenced by such possibility as technology is transferred at certain cost.

A change in β indicates alteration in capital–labor requirement in producing the intermediate input only. In what follows, the cost of technology transfer also adjusts. We thank the referee for asking for a clarificatory note on this point.

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Titel: Transaction Cost, Technology Transfer, and Mode of Organization
verfasst von: Biswajit Mandal
Sugata Marjit
Verlag: Springer India
Buch: Trade, Globalization and Development
Print ISBN: 978-81-322-1150-1

Electronic ISBN: 978-81-322-1151-8

Copyright-Jahr: 2014
DOI: https://doi.org/10.1007/978-81-322-1151-8_4