Outsourcing and Trade in a Spatial World

Hartmut Egger () and Peter H. Egger ()

No CESifo Working Paper No. 1349, CESifo Working Paper Series from CESifo GmbH

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.

Keywords: international outsourcing; international trade; spatial competition (search for similar items in EconPapers)
JEL-codes: F12 F15 L13 (search for similar items in EconPapers)
Date: 2004
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Related works:
Working Paper: Outsourcing and Trade in a Spatial World (2004)
Journal Article: Outsourcing and trade in a spatial world (2007)
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