Multi-product Offshoring

Carsten Eckel and Michael Irlacher

No 10574, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We show that the labor market effects of product 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: Cannibalization effect; Efficiency-seeking offshoring; General oligopolistic equilibrium; Product range (search for similar items in EconPapers)
JEL-codes: F12 F23 L23 (search for similar items in EconPapers)
Date: 2015-05
New Economics Papers: this item is included in nep-com and nep-int
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Related works:
Journal Article: Multi-product offshoring (2017)
Working Paper: Multi-Product Offshoring (2014)
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