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Multi-product Offshoring

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  • Eckel, Carsten
  • Irlacher, Michael

Abstract

We show that the labor market effects of product line relocations within multi-product firms differ significantly from the relocation of production tasks within single-product firms. By incorporating offshoring of labor-intensive goods in a model with multi-product firms, and exploring its implications in partial and general equilibrium, we identify the cannibalization effect of offshoring as an important transmission mechanism within multi-product firms and show that this effect hits domestic labor demand in addition to the well-known relocation effect. Furthermore, we contribute to the growing literature on multi-product firms and trade by showing that lower offshoring costs tend to increase the range of products produced.

Suggested Citation

  • Eckel, Carsten & Irlacher, Michael, 2015. "Multi-product Offshoring," CEPR Discussion Papers 10574, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:10574
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    References listed on IDEAS

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    Cited by:

    1. Sergey Kokovin & Maxim Goryunov & Takatoshi Tabuchi, 2017. "Continuous Spatial Monopolistic Competition: Matching Goods With Consumers," HSE Working papers WP BRP 173/EC/2017, National Research University Higher School of Economics.
    2. Irlacher, Michael & Baumgarten, Daniel & Koch, Michael, 2017. "Short- versus long-run effects of offshoring when sectors are heterogeneous," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168272, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    cannibalization effect; efficiency-seeking offshoring; general oligopolistic equilibrium; product range;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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