Offshoring and Sequential Production Chains: A General Equilibrium Analysis

Philipp Harms, Jaewon Jung and Oliver Lorz

No 2017-25, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: We present a two-region general equilibrium model in which firms exploit international wage differences by offshoring parts of the production process. Firms have to take into account that production steps follow a strict sequence and that transporting intermediate goods across borders is costly. We analyze how a change in transport costs and various properties of the production process affect offshoring patterns as well as factor prices, accounting for the general equilibrium effects of firms’ decisions. Interestingly, the influence of declining transport costs on the range of tasks offshored per firm may differ from the effect on the number of firms engaged in offshoring.

Keywords: Offshoring; sequential production; global production chain; task trade. (search for similar items in EconPapers)
JEL-codes: D24 F10 F23 L23 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-bec and nep-int
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Related works:
Journal Article: Offshoring and sequential production chains: A general equilibrium analysis (2021)
Working Paper: Offshoring and Sequential Production Chains: A General Equilibrium Analysis (2016)
Working Paper: Offshoring and Sequential Production Chains: A General-Equilibrium Analysis (2014)
Working Paper: Offshoring and Sequential Production Chains: A General-Equilibrium Analysis (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ema:worpap:2017-25

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