Outsourcing in a Global Economy

Gene Grossman () and Elhanan Helpman

No 3165, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study the determinants of the location of sub-contracted activity in a general equilibrium model of outsourcing and trade. We model outsourcing as an activity that requires search for a partner and relationship-specific investments that are governed by incomplete contracts. The extent of international outsourcing depends inter alia on the thickness of the domestic and foreign market for input suppliers, the relative cost of searching in each market, the relative cost of customizing inputs, and the nature of the contracting environment in each country.

Keywords: imperfect contracting; intra-industry trade; outsourcing; trade in intermediate goods (search for similar items in EconPapers)
JEL-codes: D23 F12 L14 L22 (search for similar items in EconPapers)
Date: 2002-01
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Related works:
Working Paper: Outsourcing in a Global Economy? (2002)
Working Paper: Outsourcing in a Global Economy (2002)
Working Paper: Outsourcing in a Global Economy (2002)
Working Paper: Outsourcing in a Global Economy (2002)
Journal Article: Outsourcing in a Global Economy (2005)
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