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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..

Suggested Citation

  • Amy Jocelyn Glass, 2004. "Outsourcing under Imperfect Protection of Intellectual Property," Review of International Economics, Wiley Blackwell, vol. 12(5), pages 867-884, November.
  • Handle: RePEc:bla:reviec:v:12:y:2004:i:5:p:867-884
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    References listed on IDEAS

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    Cited by:

    1. Chen, Hung-Ju, 2015. "Intellectual property rights and skills accumulation: A product-cycle model of FDI and outsourcing," Journal of Macroeconomics, Elsevier, pages 328-343.
    2. Alireza Naghavi & Julia Spies & Farid Toubal, 2011. "International Sourcing, Product Complexity and Intellectual Property Rights," Center for Economic Research (RECent) 067, University of Modena and Reggio E., Dept. of Economics "Marco Biagi".
    3. Wolf-Heimo Grieben & Fuat Sener, 2009. "Labor Unions, Globalization, and Mercantilism," CESifo Working Paper Series 2889, CESifo Group Munich.
    4. Alireza Naghavi & Julia Spies & Farid Toubal, 2015. "Intellectual property rights, product complexity and the organization of multinational firms," Canadian Journal of Economics, Canadian Economics Association, vol. 48(3), pages 881-902, August.
    5. 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.
    6. Alireza Naghavi & Julia Spies & Farid Toubal, 2013. "IPR, Product Complexity and the Organization of Multinational Firms," Working Papers 2013-31, CEPII research center.
    7. Canals, Claudia & Şener, Fuat, 2014. "Offshoring and intellectual property rights reform," Journal of Development Economics, Elsevier, pages 17-31.
    8. 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 0817, Department of Economics, University of Trento, Italia.
    9. repec:eee:reecon:v:71:y:2017:i:3:p:564-587 is not listed on IDEAS
    10. Debasis Mondal & Manash Ranjan Gupta, 2006. "Product development, imitation and economic growth: A note," The Journal of International Trade & Economic Development, Taylor & Francis Journals, pages 27-48.
    11. Vandewalle, Lore, 2017. "The Role of Accountants in Indian Self-Help Groups: A Trade-off between Financial and Non-Financial Benefits," World Development, Elsevier, vol. 93(C), pages 177-192.
    12. Daiji Kawaguchi & Tetsushi Murao, 2012. "Who bears the cost of the business cycle? Labor-market institutions and volatility of the youth unemployment rate," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), pages 1-22.
    13. 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.
    14. Stanley B Watt, 2007. "Firm Heterogeneity and Weak Intellectual Property Rights," IMF Working Papers 07/161, International Monetary Fund.
    15. Parello, Carmelo Pierpaolo, 2008. "A north-south model of intellectual property rights protection and skill accumulation," Journal of Development Economics, Elsevier, pages 253-281.
    16. Sener, Fuat & Zhao, Laixun, 2009. "Globalization, R&D and the iPod Cycle," Journal of International Economics, Elsevier, pages 101-108.
    17. S. Montresor & G. Vittucci Marzetti, 2006. "Outsourcing and structural change: shifting firm and sectoral boundaries," Working Papers 566, Dipartimento Scienze Economiche, Universita' di Bologna.
    18. Hisashi Kurihara, 2005. "Fragmentation in a product cycle model," Economics Bulletin, AccessEcon, vol. 6(4), pages 1-13.

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