Outsourcing under Imperfect Protection of Intellectual Property Academic Article uri icon

abstract

  • AbstractThe paper examines possible reasons behind expanded outsourcing by modeling outsourcing decisions when intellectual property rights are imperfectly protected. Firms in the North develop higher quality levels of existing products and then decide whether to shift some stages of production to the South. Production in the South lowers costs but entails risk of imitation by Southern firms. In this setting, a lower risk of imitation or larger labor supplies can cause increased outsourcing, a higher rate of innovation, and a lower Northern relative wage. Damage due to lower incomes can be offset by gains in terms of better quality products.

published proceedings

  • Review of International Economics

author list (cited authors)

  • Glass, A. J.

citation count

  • 27

complete list of authors

  • Glass, Amy Jocelyn

publication date

  • November 2004

publisher