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Title:International Trade, Flexible Manufacturing and Outsourcing PDF Logo
Authors:Eckel, Carsten
Issue Date:2005
Series/Report no.:CeGE discussion paper 45
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.
Subjects:International Trade
Flexible Manufacturing
Outsourcing
Vertical Integration
Globalization
General Equilibrium
JEL:L11
F12
L22
Document Type:Working Paper
Appears in Collections:cege-Diskussionspapiere, Universität Göttingen

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