EconPapers    
Economics at your fingertips  
 

Oligopoly and Outsourcing

Subhayu Bandyopadhyay () and Howard Wall ()

No 05-09 Classification-, Working Papers from Department of Economics, West Virginia University

Abstract: With outsourcing comes a perceived tension between the competitive pressures faced by domestic firms and the effect that outsourcing has on domestic workers. To address this tension, we present a general-equilibrium model with an oligopolistic export sector and a competitive import-competing sector. When there is a minimum wage, an outsourcing tax might be desirable and the usual profit-shifting objectives of an export subsidy are mitigated, perhaps completely, because it might lead to higher unemployment. Also, increased international competition has no affect on the level of outsourcing, but the direction of its effect on unemployment and national income depends on the relative factor intensities of the two sectors. Under wage flexibility, and outsourcing tax cannot be justified and the profit-shifting motive is the same as in a model without outsourcing. Further, if export subsidies are not possible due to WTO regulations, it is optimal to subsidize rather than to tax outsourcing. Finally, the effect of increased foreign competition on welfare depends on the relative factor intensities of the two sectors.

New Economics Papers: this item is included in nep-bec, nep-ind and nep-int
Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://be.wvu.edu/phd_economics/pdf/05-09.pdf First version, 2005 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://be.wvu.edu/phd_economics/pdf/05-09.pdf [301 Moved Permanently]--> https://business.wvu.edu/phd_economics/pdf/05-09.pdf)

Related works:
Working Paper: Oligopoly and Outsourcing (2005) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wvu:wpaper:05-09

Access Statistics for this paper

More papers in Working Papers from Department of Economics, West Virginia University Contact information at EDIRC.
Bibliographic data for series maintained by Josh Hall ().

 
Page updated 2019-10-13
Handle: RePEc:wvu:wpaper:05-09