1. HKS Faculty Research Working Paper Series
- Author:
- Maciej Kotowski
- Publication Date:
- 10-2019
- Content Type:
- Working Paper
- Institution:
- The John F. Kennedy School of Government at Harvard University
- Abstract:
- This paper investigates the formation of production and trading networks in an economy with general interdependencies and complex property rights. The right to exclude,a core tenet of property, grants asset owners a form of monopoly power that influences granular economic interactions. Equilibrium networks reflect the distribution of these ownership claims. Inefficient production networks may endure in equilibrium as firms multi-source to mitigate hold-up risk. Short supply chains also reduce this risk, but may preclude the production of complex goods. A generalized Top Trading Cycles algorithm, applicable to a production economy, identifies equilibrium outcomes in the model. Such outcomes can be decentralized via a price system.
- Topic:
- International Trade and Finance, International Affairs, Intellectual Property/Copyright, and National & provincial initiatives
- Political Geography:
- America