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Outsourcing and Trade in a Spatial World

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Author Info

  • 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. For example, if there is international outsourcing, both countries may gain from free trade, independently of who exports the consumption good. However, if specialized input production only occurs in the large economy and the small country exports the final good, overall world welfare may even decline, when moving towards free trade.

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Bibliographic Info

Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c009_025.

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Length: 49 pages
Date of creation: Jun 2004
Date of revision:
Handle: RePEc:deg:conpap:c009_025

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Related research

Keywords: International outsourcing; International trade; Spatial competition;

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References

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Citations

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Cited by:
  1. Kevin Wiseman, 2010. "Location, Productivity, and Trade," 2010 Meeting Papers 671, Society for Economic Dynamics.
  2. 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.
  3. Michael Hübler, 2007. "A Simple Model of Outsourcing with Cournot Competition," Kiel Working Papers 1320, Kiel Institute for the World Economy.
  4. Richard Baldwin & Daria Taglioni, 2011. "Gravity Chains: Estimating Bilateral Trade Flows When Parts And Components Trade Is Important," NBER Working Papers 16672, National Bureau of Economic Research, Inc.
  5. Pierre M. Picard & David E. Wildasin, 2009. "Labor Market Pooling, Outsourcing and Labor Contracts," CESifo Working Paper Series 2765, CESifo Group Munich.
  6. 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.
  7. Philipp Harms & Oliver Lorz & Dieter M. Urban, 2009. "Offshoring along the Production Chain," CESifo Working Paper Series 2564, CESifo Group Munich.
  8. 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.
  9. Thomas Fuchs, 2005. "Industry Structure and Productivity Growth: Panel Data Evidence for Germany from 1971–2000," Ifo Working Paper Series Ifo Working Paper No. 24, Ifo Institute for Economic Research at the University of Munich.
  10. 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.

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