Vertical Integration or Disintegration? A Bargaining Model of the Maquiladora's Case

In this paper we present an analytical framework to study the demands of foreign and domestic factors of production of the maquiladora industry. We derive the net profitability of demanding high in72 9 Vol. 21 ¿ número 41 ¿ 2012 stead of low quality inputs. We argue that differences in the quality o...

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Autores principales:	Ikuho Kochi, Ramsés Jiménez Castañeda, Raúl Alberto Ponce Rodríguez
Formato:	article
Lenguaje:	ES
Publicado:	Universidad Autónoma de Ciudad Juárez 2012
Materias:	vertical integration bargaining theory firm behavior Social Sciences H Social sciences (General) H1-99
Acceso en línea:	https://doaj.org/article/1c239ad094d4446d837717e442db3407
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spelling	oai:doaj.org-article:1c239ad094d4446d837717e442db34072021-11-11T15:37:54ZVertical Integration or Disintegration? A Bargaining Model of the Maquiladora's Case0188-98342395-8669https://doaj.org/article/1c239ad094d4446d837717e442db34072012-01-01T00:00:00Zhttp://www.redalyc.org/articulo.oa?id=85923409005https://doaj.org/toc/0188-9834https://doaj.org/toc/2395-8669In this paper we present an analytical framework to study the demands of foreign and domestic factors of production of the maquiladora industry. We derive the net profitability of demanding high in72 9 Vol. 21 ¿ número 41 ¿ 2012 stead of low quality inputs. We argue that differences in the quality of inputs between foreign and domestic factors can explain the low vertical integration of the maquiladora with the Mexican industry. We show that if the difference in quality and its positive effect in marginal production compensates the difference in prices, then the maquiladora can be induced to integrate vertically with foreign suppliers of inputs, even if the unitary cost to demand foreign inputs is strictly higher than that of domestic inputs. We also show that a depreciation of the Mexican exchange rate does not necessarily increase the maquiladora's demand of Mexican inputs. This explains recent empirical evidence showing this phenomenon. Conversely, a depreciation of the exchange rate might increase the maquiladora's demand of imported inputs if foreign and domestic factors are complementary. The above holds even if the domestic supplier participates in a bargaining game offering an efficient contract.Ikuho KochiRamsés Jiménez CastañedaRaúl Alberto Ponce RodríguezUniversidad Autónoma de Ciudad Juárezarticlevertical integrationbargaining theoryfirm behaviorSocial SciencesHSocial sciences (General)H1-99ESNóesis, Vol 21, Iss 41, Pp 101-118 (2012)
institution	DOAJ
collection	DOAJ
language	ES
topic	vertical integration bargaining theory firm behavior Social Sciences H Social sciences (General) H1-99
spellingShingle	vertical integration bargaining theory firm behavior Social Sciences H Social sciences (General) H1-99 Ikuho Kochi Ramsés Jiménez Castañeda Raúl Alberto Ponce Rodríguez Vertical Integration or Disintegration? A Bargaining Model of the Maquiladora's Case
description	In this paper we present an analytical framework to study the demands of foreign and domestic factors of production of the maquiladora industry. We derive the net profitability of demanding high in72 9 Vol. 21 ¿ número 41 ¿ 2012 stead of low quality inputs. We argue that differences in the quality of inputs between foreign and domestic factors can explain the low vertical integration of the maquiladora with the Mexican industry. We show that if the difference in quality and its positive effect in marginal production compensates the difference in prices, then the maquiladora can be induced to integrate vertically with foreign suppliers of inputs, even if the unitary cost to demand foreign inputs is strictly higher than that of domestic inputs. We also show that a depreciation of the Mexican exchange rate does not necessarily increase the maquiladora's demand of Mexican inputs. This explains recent empirical evidence showing this phenomenon. Conversely, a depreciation of the exchange rate might increase the maquiladora's demand of imported inputs if foreign and domestic factors are complementary. The above holds even if the domestic supplier participates in a bargaining game offering an efficient contract.
format	article
author	Ikuho Kochi Ramsés Jiménez Castañeda Raúl Alberto Ponce Rodríguez
author_facet	Ikuho Kochi Ramsés Jiménez Castañeda Raúl Alberto Ponce Rodríguez
author_sort	Ikuho Kochi
title	Vertical Integration or Disintegration? A Bargaining Model of the Maquiladora's Case
title_short	Vertical Integration or Disintegration? A Bargaining Model of the Maquiladora's Case
title_full	Vertical Integration or Disintegration? A Bargaining Model of the Maquiladora's Case
title_fullStr	Vertical Integration or Disintegration? A Bargaining Model of the Maquiladora's Case
title_full_unstemmed	Vertical Integration or Disintegration? A Bargaining Model of the Maquiladora's Case
title_sort	vertical integration or disintegration? a bargaining model of the maquiladora's case
publisher	Universidad Autónoma de Ciudad Juárez
publishDate	2012
url	https://doaj.org/article/1c239ad094d4446d837717e442db3407
work_keys_str_mv	AT ikuhokochi verticalintegrationordisintegrationabargainingmodelofthemaquiladorascase AT ramsesjimenezcastaneda verticalintegrationordisintegrationabargainingmodelofthemaquiladorascase AT raulalbertoponcerodriguez verticalintegrationordisintegrationabargainingmodelofthemaquiladorascase
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Vertical Integration or Disintegration? A Bargaining Model of the Maquiladora's Case

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