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Outsourcing and Trade in a Spatial World

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  • Hartmut Egger
  • Peter Egger

Abstract

This paper provides an analysis of outsourcing and trade in a spatial model à la Hotelling. In this setting, we discuss the trade-off between transport-cost-related disadvantages and outsourcing-induced production cost advantages of a large economy. The model gives a rich picture of possible trade and welfare effects of a movement towards free trade and points to the role of national transport costs for explaining these effects. Moreover, it gives economic insights in the countries’ incentives to lower tariffs and to participate in free trade agreements with partner countries that differ in size and economic capacity.

Suggested Citation

  • Hartmut Egger & Peter Egger, 2004. "Outsourcing and Trade in a Spatial World," CESifo Working Paper Series 1349, CESifo.
    • Handle: RePEc:ces:ceswps:_1349
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    Cited by:

    1. Philipp Harms & Oliver Lorz & Dieter Urban, 2012. "Offshoring along the production chain," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(1), pages 93-106, February.
    2. Matsumura Toshihiro & Matsushima Noriaki, 2010. "When Small Firms Fight Back Against Large Firms in R&D Activities," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-42, September.
    3. Gori, Giuseppe Francesco & Lambertini, Luca, 2013. "Trade liberalisation between asymmetric countries with environmentally concerned consumers," Regional Science and Urban Economics, Elsevier, vol. 43(4), pages 549-560.
    4. William C. Strange, 2009. "Viewpoint: Agglomeration research in the age of disaggregation," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(1), pages 1-27, February.
    5. Daria Taglioni & Richard Baldwin, 2014. "Gravity chains: Estimating bilateral trade flows when parts and components trade is important," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(2), pages 61-82, November.
    6. Picard, Pierre M. & Wildasin, David E., 2011. "Outsourcing, labor market pooling, and labor contracts," Journal of Urban Economics, Elsevier, vol. 70(1), pages 47-60, July.
    7. Yen-Ju Lin & Yan-Shu Lin & Kuang-I Tu, 2016. "Strategic input outsourcing and equilibrium location choice," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(1), pages 83-99, January.
    8. Egger, Hartmut & Egger, Peter, 2010. "The trade and welfare effects of mergers in space," Regional Science and Urban Economics, Elsevier, vol. 40(4), pages 210-220, July.
    9. Picard, Pierre M. & Wildasin, David, 2009. "Labor Market Pooling, Outsourcing and Labor Contracts," IZA Discussion Papers 4357, Institute of Labor Economics (IZA).
    10. Joseph Pelzman, 2013. "“Womb for Rent”: International Service Trade Employing Assisted Reproduction Technologies (ARTs)," Review of International Economics, Wiley Blackwell, vol. 21(3), pages 387-400, August.
    11. Pedro Albarran & Raquel Carrasco & Adelheid Holl, 2013. "Domestic transport infrastructure and firms’ export market participation," Small Business Economics, Springer, vol. 40(4), pages 879-898, May.
    12. Kevin Wiseman, 2010. "Location, Productivity, and Trade," 2010 Meeting Papers 671, Society for Economic Dynamics.
    13. Yen-Ju Lin & Yan-Shu Lin & Kuang-I Tu, 2016. "Strategic input outsourcing and equilibrium location choice," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(1), pages 83-99, January.
    14. Thomas Fuchs, 2005. "Industry Structure and Productivity Growth: Panel Data Evidence for Germany from 1971–2000," ifo Working Paper Series 24, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    15. Jesmin Rahman & Mr. Tianli Zhao, 2013. "Export Performance in Europe: What Do We Know from Supply Links?," IMF Working Papers 2013/062, International Monetary Fund.

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    More about this item

    Keywords

    international outsourcing; international trade; spatial competition;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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