Publication: Outsourcing in a Global Economy
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Date
2005
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Oxford University Press (OUP)
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Citation
Grossman, Gene M., and Elhanan Helpman. 2005. “Outsourcing in a Global Economy.” Rev Econ Studies 72 (1) (January): 135–159. doi:10.1111/0034-6527.00327.
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Abstract
We study the determinants of the location of sub-contracted activity in a general equilibrium
model of outsourcing and trade. We model outsourcing as an activity that requires search for a partner and relationship-specific investments that are governed by incomplete contracts. The extent of international outsourcing depends inter alia on the thickness of the domestic and foreign market for input suppliers, the relative cost of searching in each market, the relative cost of customizing inputs, and the nature of the contracting environment in each country.
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Keywords
outsourcing, imperfect contracting, intra-industry trade
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