Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/128045
Authors: 
Harms, Philipp
Lorz, Oliver
Urban, Dieter
Year of Publication: 
2009
Series/Report no.: 
Working Paper, Study Center Gerzensee 09.01
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 in terms of offshoring costs, or they may offshore (almost) the entire production chain to save transport costs. Small variations in model parameters may have a substantial impact on offshoring activities.
Subjects: 
Offshoring
International Trade
Vertical Production Chain
JEL: 
D24
F10
F23
Document Type: 
Working Paper

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