International Outsourcing and Factor Prices with Multistage Production

Wilhelm Kohler

Chapter 8 in European Economic Integration, WTO Membership, Immigration and Offshoring, 2014, pp 265-290 from World Scientific Publishing Co. Pte. Ltd.

Abstract: We develop a dual representation of the technology of international fragmentation for an industry using 2 factors in a continuum of stages. We then derive a generalized factor price frontier which incorporates an endogenous adjustment of the margin of fragmentation. Using this frontier in a 2 ˟ 2 general equilibrium model, we investigate the role of outsourcing in the adjustment to a decline in the final output price of the multistage industry, and the attendant factor price effects. We also explore the implications of an improved technology of international fragmentation on the margin of fragmentation and on domestic factor prices.

Keywords: Economic Integration; WTO Membership; Immigration; Offshoring; European Union; International Trade; Migration; Gravity; Germany; Equilibrium; Tariff Liberalization; Commercial Policy; Eastern Enlargement (search for similar items in EconPapers)
Date: 2014
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