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Hisashi Kurihara
 
''Fragmentation in a product cycle model''
( 2005, Vol. 6 No.4 )
 
 
We develop a simple model in which fragmentation, innovation and imitation take in place simultaneously. Firms in North fragment their business into two parts: assembly and services. A reduction in the cost of services to coordinate fragmented businesses between North and South does not enhance fragmentation. On the contrary, the arrival rate of imitation accelerates and that of innovation slows down. Consequently, the life of Northern goods becomes shorter and that of Southern copies becomes longer. We also derive other results to compare to those in Grossman and Helpman (1991) and in Glass and Saggi (2001).
 
 
Keywords: Coordinatin Costs
JEL: F2 - International Factor Movements and International Business: General
 
Manuscript Received : Jan 24 2005 Manuscript Accepted : Apr 27 2005

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