A simple model of service offshoring with time zone differences

Toru Kikuchi and Ngo Long

The North American Journal of Economics and Finance, 2010, vol. 21, issue 3, 217-227

Abstract: We propose a two-country monopolistic competition model of business service offshoring that captures the advantage conferred by time zone differences. We emphasize the role of the entrepreneurs, who decide how to produce business services (i.e., domestic service provision or service offshoring). It is shown that the utilization of communication networks induces a dramatic change in industrial structure due to entrepreneurial relocation (i.e., service offshoring) to take advantage of time zone differences. We show also show that in the presence of moving costs for entrepreneurs, technological improvements and the resulting increase in service offshoring may reduce a country's welfare.

Keywords: Service; offshoring; Time; zone; differences; Technological; change; Entrepreneurs; Communication; networks (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (16)

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Working Paper: A Simple Model of Service Offshoring with Time Zone Differences (2010)
Working Paper: A Simple Model of Service Offshoring with Time Zone Differences (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:21:y:2010:i:3:p:217-227

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