Working Paper: CEPR ID: DP8880
Authors: Dalia Marin
Abstract: What insights can be gained from bringing the theory of the firm to the global economy? I discuss several new features of the world economy that can be explained by incorporating the theory of the firm into the theory of international trade. Among the new features I discuss are the move to flatter corporate hierarchies and the decentralization of authority in firms, the "war for talent", the rise of CEO pay in rich countries, organizational convergence across countries, and firm heterogeneity.
Keywords: corporate organisation across countries; empirical test of the theory of the firm and international trade with endogenous organisation
JEL Codes: D23; F12; F14; L22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| International trade (F19) | flatter corporate hierarchies (L22) |
| International trade (F19) | decentralization of decision-making within firms (L22) |
| Increased competition (L13) | changes in authority delegation (M54) |
| International trade (F19) | changes in corporate organization (L22) |
| Increased competition (L13) | rise in CEO pay (M12) |
| International trade (F19) | non-monotonic relationship between trade openness and organizational structure (F13) |