Resource title

International outsourcing under monopolistic competition: winners and losers

Resource image

image for OpenScout resource :: International outsourcing under monopolistic competition: winners and losers

Resource description

We show that, even with flexible domestic wages, international outsourcing may worsen the welfare of the home country and reduce the profits of all firms. If wages are rigid, outsourcing is welfare-improving if and only if the sum of the trade creation effect and the exploitation effect exceeds the trade diversion effect. A wage subsidy may improve welfare. We also extend the model to a two-period framework. Delaying outsourcing can be gainful because the fixed cost of outsourcing may fall over time. A social planner would choose a different speed of outsourcing than that achieved under laissez-faire.

Resource author

Viet Do, Ngo van Long

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/26079

Resource license

Adapt according to the presented license agreement and reference the original author.