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Title:Offshoring along the production chain PDF Logo
Authors:Harms, Philipp
Lorz, Jens Oliver
Urban, Dieter M.
Issue Date:2009
Series/Report no.:CESifo working paper 2564
Abstract:Recent contributions on offshoring often assume that firms can freely split their production process into separate steps which can be ranked according to the cost savings from producing abroad. We replace this assumption by the notion of a technologically determined sequence of production steps. In our model, cost savings from offshoring fluctuate along the production chain, and moving unfinished goods across borders causes transport costs. We show that, in such a setting, firms may refrain from offshoring even if relocating individual steps would be advantageous. Conversely, small variations in model parameters may lead to a large increase in offshoring activities.
Subjects:Offshoring
international trade
vertical production chain
JEL:D24
F10
F23
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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