Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88550
Authors: 
Schwarz, Christian
Suedekum, Jens
Year of Publication: 
2013
Series/Report no.: 
DICE Discussion Paper 125
Abstract: 
We develop a theory of a firm in an incomplete contracts environment which decides on the complexity, the organization, and the global scale of its production process. Specifically, the firm decides i) how many intermediate inputs are simultaneously combined to a final product, ii) if the supplier of each input is an external contractor or an integrated affiliate, and iii) if that input is offshored to a foreign country. Our model leads to a rich set of predictions on the internal structure of multinational firms. In particular, it provides an explanation why many firms choose hybrid sourcing and have both outsourced and integrated suppliers.
Subjects: 
multinational firms
outsourcing
intra-firm trade
offshoring
vertical FDI
JEL: 
F12
D23
L23
ISBN: 
978-3-86304-124-3
Document Type: 
Working Paper

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