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Frontiers of Economics in China

Front. Econ. China    2018, Vol. 13 Issue (1) : 32-51     https://doi.org/10.3868/s060-007-018-0004-4
Orginal Article |
Offshoring and Reshoring: The Roles of Incomplete Contracts and Relative Bargaining Power
Ngo Van Long1(), Maxwell Tuuli2()
1. Department of Economics, McGill University, Montreal, Quebec, H3A 2T7, Canada
2. Peter B. Gustavson School of Business, University of Victoria, Victoria, BC V8P 5C2, Canada
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Abstract

This paper demonstrates that an increase in bargaining power of Northern firms relative to that of their Southern contractors can trigger reshoring if the North-South wage differential is moderate, such that only industries with a high share of unskilled labor find outsourcing profitable. However, such an increase in Northern bargaining power can increase offshoring if the wage differential is so high that even industries with a low share of unskilled labor also offshore.

Keywords incomplete contracts      bargaining power      offshoring      reshoring     
Issue Date: 15 March 2018
 Cite this article:   
Ngo Van Long,Maxwell Tuuli. Offshoring and Reshoring: The Roles of Incomplete Contracts and Relative Bargaining Power[J]. Front. Econ. China, 2018, 13(1): 32-51.
 URL:  
http://journal.hep.com.cn/fec/EN/10.3868/s060-007-018-0004-4
http://journal.hep.com.cn/fec/EN/Y2018/V13/I1/32
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