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Limited enforcement and the organization of production

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  • Erwan Quintin

Abstract

This paper describes a dynamic, general equilibrium model designed to assess whether contractual imperfections in the form of limited enforcement can account for international differences in the organization of production. In the model, limited enforcement constrains agents to operate establishments below their optimal scale. As a result, economies where contracts are enforced more efficiently tend to be richer and emphasize large scale production. Calibrated simulations of the model reveal that these effects can be large and account for a sizeable part of the observed differences in the size distribution of manufacturing establishments between the United States, Mexico and Argentina.

Suggested Citation

  • Erwan Quintin, 2003. "Limited enforcement and the organization of production," Working Papers 0109, Federal Reserve Bank of Dallas.
    • Handle: RePEc:fip:feddwp:0109
    Note: Published as: Quintin, Erwan (2008), "Limited Enforcement and the Organization of Production," Journal of Macroeconomics 30 (3): 1222-1245.
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    More about this item

    Keywords

    Limited enforcement; organization of production; economic development;
    All these keywords.

    JEL classification:

    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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