Offshoring and Reshoring: The Roles of Incomplete Contracts and Relative Bargaining Power

Ngo Long and Maxwell Tuuli ()
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Maxwell Tuuli: Peter B. Gustavson School of Business, University of Victoria, Victoria, BC V8P 5C2, Canada

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2018, vol. 13, issue 1, 32-51

Abstract: This paper demonstrates that an increase in bargaining power of Northern firms relative to that of their Southern contractors can trigger reshoring if the North- South wage differential is moderate, such that only industries with a high share of unskilled labor find outsourcing profitable. However, such an increase in Northern bargaining power can increase offshoring if the wage differential is so high that even industries with a low share of unskilled labor also offshore.

Keywords: incomplete contracts; bargaining power; offshoring; reshoring (search for similar items in EconPapers)
JEL-codes: D23 F12 F14 F21 F23 L22 L23 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:fec:journl:v:13:y:2018:i:1:p:32-51

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