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Domestic and Global Sourcing
journal contribution
posted on 2017-06-07, 04:02 authored by Cheng, Wenli, Zhang, DingshengThis paper develops a general equilibrium Ricardian model with transaction costs to investigate the determinants of the firm's sourcing decision. It derives conditions under which different sourcing choices and corresponding trade patterns occur in general equilibrium. These conditions suggest that, inter alia, the choice between vertical integration and specialisation depends on the relative internal transaction costs associated with vertical integration and external transaction costs associated with international outsourcing; and that the equilibrium sourcing structures and trade patterns are consistent with a refined theory of comparative advantage that incorporates the effects of transaction costs in international trade.
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2005Series
Monash University. Faculty of Business and Economics. Department of EconomicsUsage metrics
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