Offshoring along the Production Chain

Philipp Harms, Oliver Lorz and Dieter Urban

No 2564, CESifo Working Paper Series from CESifo

Abstract: Recent contributions on offshoring often assume that firms can freely split their production process into separate steps which can be ranked according to the cost savings from producing abroad. We replace this assumption by the notion of a technologically determined sequence of production steps. In our model, cost savings from offshoring fluctuate along the production chain, and moving unfinished goods across borders causes transport costs. We show that, in such a setting, firms may refrain from offshoring even if relocating individual steps would be advantageous. Conversely, small variations in model parameters may lead to a large increase in offshoring activities.

Keywords: offshoring; international trade; vertical production chain (search for similar items in EconPapers)
JEL-codes: D24 F10 F23 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Offshoring along the production chain (2012)
Journal Article: Offshoring along the production chain (2012)
Working Paper: Offshoring Along the Production Chain (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_2564

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