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Outsourcing under Imperfect Protection of Intellectual Property

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  • Amy Jocelyn Glass

Abstract

The paper examines possible reasons behind expanded outsourcing by modeling outsourcing decisions when intellectual property rights are imperfectly protected. Firms in the North develop higher quality levels of existing products and then decide whether to shift some stages of production to the South. Production in the South lowers costs but entails risk of imitation by Southern firms. In this setting, a lower risk of imitation or larger labor supplies can cause increased outsourcing, a higher rate of innovation, and a lower Northern relative wage. Damage due to lower incomes can be offset by gains in terms of better quality products. Copyright Blackwell Publishing Ltd 2004..

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 12 (2004)
Issue (Month): 5 (November)
Pages: 867-884

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Handle: RePEc:bla:reviec:v:12:y:2004:i:5:p:867-884

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Citations

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Cited by:
  1. Debasis Mondal & Manash Ranjan Gupta, 2006. "Product development, imitation and economic growth: A note," The Journal of International Trade & Economic Development, Taylor & Francis Journals, Taylor & Francis Journals, vol. 15(1), pages 27-48.
  2. Alireza Naghavi & Julia Spies & Farid Toubal, 2011. "International Sourcing, Product Complexity and Intellectual Property Rights," Working Papers, Fondazione Eni Enrico Mattei 2011.78, Fondazione Eni Enrico Mattei.
  3. Canals, Claudia & Şener, Fuat, 2014. "Offshoring and intellectual property rights reform," Journal of Development Economics, Elsevier, Elsevier, vol. 108(C), pages 17-31.
  4. Alireza Naghavi & Julia Spies & Farid Toubal, 2013. "IPR, Product Complexity and the Organization of Multinational Firms," Working Papers 2013-31, CEPII research center.
  5. Stanley Watt, 2007. "Firm Heterogeneity and Weak Intellectual Property Rights," IMF Working Papers 07/161, International Monetary Fund.
  6. Nuttapon Photchanaprasert, 2011. "Innovation and Production Offshoring: Implications on Welfare," Global COE Hi-Stat Discussion Paper Series, Institute of Economic Research, Hitotsubashi University gd10-185, Institute of Economic Research, Hitotsubashi University.
  7. Hisashi Kurihara, 2005. "Fragmentation in a product cycle model," Economics Bulletin, AccessEcon, vol. 6(4), pages 1-13.
  8. S. Montresor & G. Vittucci Marzetti, 2006. "Outsourcing and structural change: shifting firm and sectoral boundaries," Working Papers 566, Dipartimento Scienze Economiche, Universita' di Bologna.
  9. Chen, Hung-Ju, 2013. "Intellectual Property Rights and Skills Accumulation: A North-South Model of FDI and Outsourcing," MPRA Paper 45035, University Library of Munich, Germany.
  10. Lore Vandewalle, 2011. "The Role of Accountants in Indian Microfinance Groups: a Trade-Off Between Financial and Non-Financial Benefits," Working Papers 1118, University of Namur, Department of Economics.
  11. Alireza Naghavi & Julia Spies & Farid Toubal, 2013. "Intellectual Property Rights, Product Complexity, and the Organization of Multinational Firms," CESifo Working Paper Series 4430, CESifo Group Munich.
  12. Wolf-Heimo Grieben & Fuat Sener, 2009. "Labor Unions, Globalization, and Mercantilism," CESifo Working Paper Series 2889, CESifo Group Munich.
  13. Parello, Carmelo Pierpaolo, 2008. "A north-south model of intellectual property rights protection and skill accumulation," Journal of Development Economics, Elsevier, Elsevier, vol. 85(1-2), pages 253-281, February.
  14. Chiara Franco & Francesco Rentocchini & Giuseppe Vittucci Marzetti, 2008. "Why do firms invest abroad? An analysis of the motives underlying Foreign Direct Investments," Department of Economics Working Papers, Department of Economics, University of Trento, Italia 0817, Department of Economics, University of Trento, Italia.

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