Carsten Eckel () and
Michael Irlacher ()
European Economic Review, 2017, vol. 94, issue C, 71-89
We show that the labor market effects of production line relocations within multi-product firms differ significantly from the relocation of production tasks within single-product firms. By incorporating offshoring of labor-intensive goods in a model with multi-product firms, and exploring its implications in partial and general equilibrium, we identify the cannibalization effect of offshoring as an important transmission mechanism within multi-product firms and show that this effect hits domestic labor demand in addition to the well-known relocation effect. Furthermore, we contribute to the growing literature on multi-product firms and trade by showing that lower offshoring costs tend to increase the range of products produced.
Keywords: Multi-product firms; Cannibalization effect; Labor market effects of offshoring; Efficiency-seeking offshoring; General oligopolistic equilibrium (search for similar items in EconPapers)
JEL-codes: F12 F23 L23 (search for similar items in EconPapers)
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Working Paper: Multi-product Offshoring (2015)
Working Paper: Multi-Product Offshoring (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:94:y:2017:i:c:p:71-89
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