Abstract
We show that the labor market effects of production line relocations within multi-product firms differ significantly from the relocation of production tasks within single-product firms. By incorporating offshoring of labor-intensive goods in a model with multi-product firms, and exploring its implications in partial and general equilibrium, we identify the cannibalization effect of offshoring as an important transmission mechanism within multiproduct firms and show that this effect hits domestic labor demand in addition to the well-known relocation effect. Furthermore, we contribute to the growing literature on multi-product firms and trade by showing that lower offshoring costs tend to increase the range of products produced.
| Item Type: | Journal article |
|---|---|
| Keywords: | Multi-product firms; Cannibalization effect; Labor market effects of offshoring; Efficiency-seeking offshoring; General oligopolistic equilibrium |
| Faculties: | Economics > Chairs > Seminar for International Trade Theory and Trade Policy |
| Subjects: | 300 Social sciences > 330 Economics |
| JEL Classification: | F12, F23, L23 |
| ISSN: | 0014-2921 |
| Language: | English |
| Item ID: | 49882 |
| Date Deposited: | 14. Jun 2018 09:42 |
| Last Modified: | 04. Nov 2020 13:27 |
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