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The Labor Market Effects of Outsourcing Parts and Components: Adverse Cournot Competition

  • Michael Hübler

This paper contributes to Hübler (2008) who analyses a partial equilibrium model of outsourcing with Cournot competition in intermediate good production. Final production is located in Western Europe, whereas the intermediate good can be manufactured by a Western (outsourcing) or Eastern European supplier (offshore outsourcing). The paper asks the question how changes in production costs, in particular wages, affect output and thus labor input in the two regions. The paper proves analytically that under certain conditions higher production costs in one region reduce intermediate good production in both regions

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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1564.

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Length: 11 pages
Date of creation: Oct 2009
Date of revision:
Handle: RePEc:kie:kieliw:1564
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