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Do Transport Costs Change Organizational Form under Two-way Trade Market?

이기동|최강식
한국계량경제학회|2023.03|계량경제학보 (Journal of Economic Theory and Econometrics)|제34권 제1호|pp. 44-83|DOI 10.22812/jetem.2023.34.1.003

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키워드

tradeDelegationM-formU-formtransport costs
주제분류경제학

초록

Focusing on the asymmetric freight rates associated with backhaul problem, we analyze firms’ choice of organizational form between the unitary form (U-form) and the multidivisional form (M-form). With exogenous freight rates, choosing M-form is the dominant strategy even though collective choice of the U-form benefits both firms (prisoners’ dilemma situation). Allowing for endogenous freight rates results in asymmetric freight rates between port pairs due to trade imbalances. In this case, unlike previous studies, diverse types of organization form, i.e., both firms U-form, both firms M-form, and only one firm U-form, arise depending on the product substitutability and marginal cost of transport firm. In any case, the U-form is preferred to the M-form from the welfare perspective in the symmetric organizational forms between firms.

Abstract

Focusing on the asymmetric freight rates associated with backhaul problem, we analyze firms’ choice of organizational form between the unitary form (U-form) and the multidivisional form (M-form). With exogenous freight rates, choosing M-form is the dominant strategy even though collective choice of the U-form benefits both firms (prisoners’ dilemma situation). Allowing for endogenous freight rates results in asymmetric freight rates between port pairs due to trade imbalances. In this case, unlike previous studies, diverse types of organization form, i.e., both firms U-form, both firms M-form, and only one firm U-form, arise depending on the product substitutability and marginal cost of transport firm. In any case, the U-form is preferred to the M-form from the welfare perspective in the symmetric organizational forms between firms.

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