Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/3977
Authors: 
Hübler, Michael
Year of Publication: 
2007
Series/Report no.: 
Kiel Working Paper 1320
Abstract: 
The paper analyses a partial equilibrium outsourcing model with Cournot competition in intermediate good production. Final production is located in western Europe, whereas the intermediate good can be manufactured by a western (outsourcing) or eastern European supplier (offshore outsourcing). Interregional production (factor) allocation depending on factor prices and productivity levels is investigated analytically and graphically. The main results are: Higher production costs in one region reduce intermediate good production in both regions leading to a substitution effect between high- and low-skilled labour intensive inputs rather than between eastern and western low-skilled labour intensive inputs. The sensitivity of outsourcing activities to production cost changes is highest when the interregional cost differential is smallest.
Subjects: 
Outsourcing
Cournot competition
Intermediate good
Offshoring
JEL: 
J31
D24
D43
F20
Document Type: 
Working Paper

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