Outsourcing and Trade in a Spatial World

Hartmut Egger () and Peter H. Egger ()

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

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. For example, if there is international outsourcing, both countries may gain from free trade, independently of who exports the consumption good. However, if specialized input production only occurs in the large economy and the small country exports the final good, overall world welfare may even decline, when moving towards free trade.

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: 2004-06
View list of references View citations in EconPapers

Downloads: (external link)
http://www.ifw-kiel.de/VRCent/DEGIT/paper/degit_09/C009_025.pdf (application/pdf)

Related works:
Working Paper: Outsourcing and Trade in a Spatial World (2004)
Journal Article: Outsourcing and trade in a spatial world (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this paper

More papers in DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade
Contact information at EDIRC.
Series data maintained by Dr. Birgit Wolfrath ().