Outsourcing in a global economy

Gene Grossman; Elhanan Helpman

doi:10.1111/0034-6527.00327

Outsourcing in a global economy

Gene Grossman, Elhanan Helpman

Princeton School of Public and International Affairs

Research output: Contribution to journal › Article › peer-review

494 Scopus citations

Abstract

We study the determinants of the location of subcontracted activity in a general equilibrium model of outsourcing and trade. We model outsourcing as an activity that requires search for a partner and relationship-specific investments that are governed by incomplete contracts. The extent of international outsourcing depends inter alia on the thickness of the domestic and foreign market for input suppliers, the relative cost of searching in each market, the relative cost of customizing inputs and the nature of the contracting environment in each country.

Original language	English (US)
Pages (from-to)	135-159
Number of pages	25
Journal	Review of Economic Studies
Volume	72
Issue number	1
DOIs	https://doi.org/10.1111/0034-6527.00327
State	Published - Jan 2005

All Science Journal Classification (ASJC) codes

Economics and Econometrics

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10.1111/0034-6527.00327

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title = "Outsourcing in a global economy",

abstract = "We study the determinants of the location of subcontracted activity in a general equilibrium model of outsourcing and trade. We model outsourcing as an activity that requires search for a partner and relationship-specific investments that are governed by incomplete contracts. The extent of international outsourcing depends inter alia on the thickness of the domestic and foreign market for input suppliers, the relative cost of searching in each market, the relative cost of customizing inputs and the nature of the contracting environment in each country.",

author = "Gene Grossman and Elhanan Helpman",

note = "Funding Information: Acknowledgements. We thank Patrick Bolton, Oliver Hart, Wolfgang Pesendorfer, Ariel Rubinstein, Fabrizio Zilibotti and three anonymous referees for helpful comments and suggestions and Yossi Hadar and Taeyoon Sung for developing our simulation programs. We are also grateful to the National Science Foundation and the US–Israel Binational Science Foundation for financial support.",

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Outsourcing in a global economy

Abstract

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