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Trade Liberalization and Strategic Outsourcing Author info | Abstract | Publisher info | Download info | Related research | Statistics Yongmin Chen () (University of Colorado at Boulder )
Jota Ishikawa () (Hitotsubashi University )
Zhihao Yu () (Department of Economics, Carleton University )
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This paper develops a model of strategic outsourcing. With trade liberalization in the intermediate-product market, a domestic firm may choose to purchase a key intermediate good from a more efficient foreign producer, who also competes with the domestic firm for a final good. This has a strategic effect on competition. Unlike the outsourcing motivated by cost saving, the strategic outsourcing has a collusive effect that could raise the prices of both intermediate and final goods. Trade liberalization in the intermediate-good market has a very different effect compared with trade liberalization in the final-good market.
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Paper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number
02-12.
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Length: 27 pages
Date of creation: 01 Dec 2002Date of revision:
Publication status: Published: Carleton Economic PaperHandle: RePEc:car:carecp:02-12Contact details of provider: Postal: 1125 Colonel By Drive, Ottawa Ontario, K1S 5B6 Canada Phone: 1-613-520-3744 Fax: 1-613-520-3906
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Keywords: Outsourcing ; Vertical oligopolies ; Collusive effect ; Other versions of this item:
Find related papers by JEL classification: F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
This paper has been announced in the following NEP Reports :
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
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"FDI in Post-Production Services and Product Market Competition ,"
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