Transaction Cost, Technology Transfer, and Mode of Organization



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.


Transaction Cost Technology Transfer Trading Cost Intermediate Input Closed Economy 


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Copyright information

© Springer India 2014

Authors and Affiliations

  1. 1.Department of Economics and PoliticsVisva-Bharati UniversitySantiniketanIndia
  2. 2.Centre for Studies in Social SciencesKolkataIndia

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