Outsourcing and R&D

University of Nottingham GEP Working Paper No. 2005/27

17 Pages Posted: 6 Dec 2005

See all articles by Sugata Marjit

Sugata Marjit

Centre for Studies in Social Sciences, Calcutta; Indian Institute of Foreign Trade; City University of Hong Kong (CityU) - Department of Economics & Finance

Arijit Mukherjee

University of Nottingham - School of Economics

Date Written: December 2005

Abstract

This paper considers the effect of outsourcing on R&D of the contracting firm. We show that outsourcing increases (decreases) R&D investment in a declining (booming) industry. If outsourcing reduces potential R&D investment, it may also make the consumers worse off. We show that outsourcing raises R&D effort in more competitive product markets. If outsourcing takes place in unskilled activities, it is likely to increase R&D if proportion of skilled employment is higher and skill wage is relatively high. If outsourcing positively affects the productivity of the skilled workers, it provides further disincentive for R&D.

Keywords: R&D, Skilled and unskilled labors

JEL Classification: F12, L14, L22, D23

Suggested Citation

Marjit, Sugata and Marjit, Sugata and Mukherjee, Arijit, Outsourcing and R&D (December 2005). University of Nottingham GEP Working Paper No. 2005/27, Available at SSRN: https://ssrn.com/abstract=863885 or http://dx.doi.org/10.2139/ssrn.863885

Sugata Marjit (Contact Author)

Centre for Studies in Social Sciences, Calcutta ( email )

R 1, B.P. Township
Kolkata, West Bengal, India
Kolkata, West Bengal 700094
India

Indian Institute of Foreign Trade ( email )

New Delhi
QUTUB INSTITUTIONAL AREA
NEW DELHI, 110016
India

City University of Hong Kong (CityU) - Department of Economics & Finance ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

Arijit Mukherjee

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom
+44 115 9514733 (Phone)
+44 115 9514159 (Fax)

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