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The labor market effects of outsourcing parts and components: adverse Cournot competition

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  • Hübler, Michael

Abstract

This paper contributes to Hübler (2008) who analyses a partial equilibrium model of outsourcing 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). The paper asks the question how changes in production costs, in particular wages, affect output and thus labor input in the two regions. The paper proves analytically that under certain conditions higher production costs in one region reduce intermediate good production in both regions.

Suggested Citation

  • Hübler, Michael, 2009. "The labor market effects of outsourcing parts and components: adverse Cournot competition," Kiel Working Papers 1564, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1564
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    File URL: https://www.econstor.eu/bitstream/10419/30066/1/618290966.pdf
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    Cited by:

    1. Boysen-Hogrefe, Jens & Dovern, Jonas & Groll, Dominik & van Roye, Björn & Scheide, Joachim, 2010. "Droht in Deutschland eine Kreditklemme?," Kiel Discussion Papers 472/473, Kiel Institute for the World Economy (IfW Kiel).

    More about this item

    Keywords

    Offshoring; outsourcing; Cournot competition; intermediate goods; high-skilled; low-skilled;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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