This paper proposes a model in which the removal of barriers to trade and factor mobility is associated with endogenous fragmentation of the value-added-chain. Fragmentation is the outcome of cost competition - the profit-maximizing choice of cost structure by monopolistically competitive firms....

This paper proposes a model in which the removal of barriers to trade and factor mobility is associated with endogenous fragmentation of the value-added chain. Fragmentation is the outcome of cost competition - the profit-maximizing choice of cost structure by monopolistically competitive firms....

In recent decades the world economy has been characterized by deepening and widening integration. Throughout this time, there have been concerns that this process may foster the geographical concentration of industries, a view substantiated by contributions to the new economic geography. In this...