International Trade, Flexible Manufacturing and Outsourcing

Carsten Eckel

No 45, University of Göttingen Working Papers in Economics from University of Goettingen, Department of Economics

Abstract: This study analyzes the impact of international trade on the diffusion of flexible manufacturing in a general equilibrium framework. Suppliers produce a flexible base product that can be adapted to the specific input requirements of a continuum of downstream industries. The vertical structure is determined by the trade-off between economies of scope in flexible manufacturing and product specificity of in-house production. In this framework, globalization can lead to alternating waves of insourcing and outsourcing, but once the world market reaches a threshold size, outsourcing prevails. We also derive a number of testable predictions with regard to firm size and productivity measures that are in line with recent empirical and casual evidence.

Keywords: International Trade; Flexible Manufacturing; Outsourcing; Vertical Integration; Globalization; General Equilibrium (search for similar items in EconPapers)
JEL-codes: F12 L11 L22 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: International trade, flexible manufacturing, and outsourcing (2009)
Journal Article: International trade, flexible manufacturing, and outsourcing (2009)
Working Paper: International trade, flexible manufacturing, and outsourcing (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cegedp:45

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