Multi-Product Offshoring

Arbeitspapier

In this paper, we incorporate offshoring of labor-intensive goods in a model with multi-product firms, and explore its implications in partial and general oligopolistic equilibrium. We identify important aspects of this phenomenon and argue that improvements in offshoring opportunities can affect the geographic organization of a firm and its product range. Multi-product firms internalize supply linkages (flexible manufacturing) and demand linkages (cannibalization effect). In partial equilibrium, we find that more products are produced offshore on a larger scale and firms expand their product range with better prospects for offshoring. We identify the cannibalization effect as an important transmission mechanism within multi-product firms and show that the latter effect hits domestic labor demand in addition to the well-known relocation effect. Interestingly in general equilibrium these effects lead to adjustments in domestic factor prices and may cause a partial re-relocation of product lines.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Munich Discussion Paper ; No. 2014-29

Classification and Topics

• Classification: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Multinational Firms; International Business ; Organization of Production
• Subject: Multi-Product Firms ; Cannibalization Effect ; Product Range ; Efficiency-seeking Offshoring ; General Oligopolistic Equilibrium.

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Eckel, Carsten ; Irlacher, Michael
• Event: Veröffentlichung
• (who): Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät
• (where): München
• (when): 2014

Further information

• DOI: doi:10.5282/ubm/epub.21021
• Handle: http://hdl.handle.net/10419/104431
• URN: urn:nbn:de:bvb:19-epub-21021-1
• Last update: 10.03.2025, 11:45 AM CET