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Outsourcing in a Global Economy
Article first published online: 23 DEC 2004
DOI: 10.1111/0034-6527.00327
1467-937X/asset/cover.gif?v=1&s=0a4d3c8db6f202a2e6293774a9f78849ebd4bc9c "Review of Economic Studies")
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How to Cite
Grossman, G. M. and Helpman, E. (2005), Outsourcing in a Global Economy. Review of Economic Studies, 72: 135–159. doi: 10.1111/0034-6527.00327
Publication History
- Issue published online: 23 DEC 2004
- Article first published online: 23 DEC 2004
- Received on August 2002 and accepted for publication on November 2003
- Abstract
- Article
- References
- Cited By
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.