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Industry Dynamics of Offshoring: The Case of Hard Disk Drives

Mitsuru Igami

American Economic Journal: Microeconomics, 2018, vol. 10, issue 1, 67-101

Abstract: This paper uncovers a novel pattern of offshoring dynamics in a high-tech industry, and proposes a structural model to explain it. Specifically, the hard disk drive industry (1976-1998) witnessed massive waves of entry, exit, and the relocation of manufacturing plants to low-cost countries, in which shakeouts occurred predominantly among home firms and almost all survivors were offshore firms. I build and estimate a dynamic offshoring game with entry/exit to measure the benefits and costs of offshoring, investigate the relationship between offshoring and market structure, and assess the impacts of hypothetical government interventions.

JEL-codes: D24 D43 F14 L13 L24 L63 O14 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/mic.20150256
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Handle: RePEc:aea:aejmic:v:10:y:2018:i:1:p:67-101