Global Sourcing

Citation:

Antràs, Pol, and Elhanan Helpman. 2004. “Global Sourcing.” Journal of Political Economy 112 (3): 552-80.
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Abstract:

We present a North-South model of international trade in which differentiated products are developed in the North. Sectors are populated by final-good producers who differ in productivity levels. On the basis of productivity and sectoral characteristics, firms decide whether to integrate into the production of intermediate inputs or outsource them. In either case they have to decide from which country to source the inputs. Final-good producers and their suppliers must make relationship-specific investments, both in an integrated firm and in an arm’s-length relationship. We describe an equilibrium in which firms with different productivity levels choose different ownership structures and supplier locations. We then study the effects of within-sectoral heterogeneity and variations in industry characteristics on the relative prevalence of these organizational forms.

Notes:

Published versions have been posted with the written permission of the journals where they appeared. Standard copyright rules apply. Please download and print for personal use only. Elhanan Helpman's website

DOI:10.1086/383099

Stable URL: http://www.jstor.org/stable/10.1086/383099
Last updated on 03/22/2013