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From Local to Global: Offshoring and Asset Prices

Author

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  • Lorenzo Bretscher

    (Department of Finance, University of Lausanne, Swiss Finance Institute, Centre of Economic Policy Research, 1015 Lausanne, Switzerland)

Abstract

Industries differ in the extent to which they can offshore their production. I document that industries with low offshoring potential carry a sizeable risk premium compared with industries with high offshoring potential, suggesting that the possibility to offshore affects industry risk. A two-country dynamic trade model in which offshoring allows firms to secure market share against foreign competitors can rationalize the empirical findings.

Suggested Citation

  • Lorenzo Bretscher, 2023. "From Local to Global: Offshoring and Asset Prices," Management Science, INFORMS, vol. 69(3), pages 1420-1448, March.
    • Handle: RePEc:inm:ormnsc:v:69:y:2023:i:3:p:1420-1448
    DOI: 10.1287/mnsc.2022.4393
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