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Multi-product offshoring

Carsten Eckel () and Michael Irlacher ()

European Economic Review, 2017, vol. 94, issue C, 71-89

Abstract: 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)
Date: 2017
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Related works:
Working Paper: Multi-product Offshoring (2015) Downloads
Working Paper: Multi-Product Offshoring (2014) Downloads
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