Outsourcing in a Global Economy--GENE M. GROSSMAN

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.

“Subcontracting as many non-core activities as possible is a central element of the new
economy”. Financial Times, 31 July 2001, p. 10.

[此贴子已经被作者于2009-5-2 16:40:51编辑过]