Outsourcing and Trade in a Spatial World

56 Pages Posted: 17 Dec 2004

See all articles by Hartmut Egger

Hartmut Egger

University of Zurich - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Peter H. Egger

Ifo Institute for Economic Research - International Trade and Foreign Direct Investment; ETH Zürich; Ludwig-Maximilians University of Munich; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Date Written: December 2004

Abstract

This paper provides an analysis of outsourcing and trade in a spatial model a la Hotelling. In this setting, we discuss the trade-off between transport-cost-related disadvantages and outsourcing-induced production cost advantages of a large economy. The model gives a rich picture of possible trade and welfare effects of a movement towards free trade and points to the role of national transport costs for explaining these effects. Moreover, it gives economic insights in the countries' incentives to lower tariffs and to participate in free trade agreements with partner countries that differ in size and economic capacity.

Keywords: international outsourcing, international trade, spatial competition

JEL Classification: F12, F15, L13

Suggested Citation

Egger, Hartmut and Egger, Peter H., Outsourcing and Trade in a Spatial World (December 2004). Available at SSRN: https://ssrn.com/abstract=637182 or http://dx.doi.org/10.2139/ssrn.637182

Hartmut Egger (Contact Author)

University of Zurich - Department of Economics ( email )

Zürichbergstrasse 14
CH-8032 Zurich
Switzerland

HOME PAGE: http://www.wwi.unizh.ch/staff/egger/index.php

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

Peter H. Egger

Ifo Institute for Economic Research - International Trade and Foreign Direct Investment ( email )

Poschingerstr. 5
Munich, DE-81679
Germany
+49 0 89 9224 1238 (Phone)
+49 0 89 985369 (Fax)

HOME PAGE: http://www.cesifo-group.de/portal/page?_pageid=36,425628&_dad=portal&_schema=PORTAL

ETH Zürich ( email )

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Zurich
Switzerland

Ludwig-Maximilians University of Munich

Schackstr. 4
Munich, 80539
Germany

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

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