Working Paper: NBER ID: w11184
Authors: Deborah Swenson
Abstract: This paper studies U.S. overseas assembly imports to identify whether factors related to information or search costs appear to condition outsourcing decisions. The data for 1991-2000 show that U.S. overseas assembly imports were characterized by incomplete pass-through of production and trade costs to import prices, though products assembled in more highly educated countries passed-through a much larger portion of their cost changes. In addition, the price of outsourcing imports responded to competing suppliers' prices, with the largest responses occurring for products in capital-intense industries. These differential price responses suggest that information issues play an important role in the mediation of outsourcing relationships.
Keywords: Outsourcing; International Trade; Price Decisions; Information Costs; Search Costs
JEL Codes: F1; F2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Production costs (D24) | Prices (D49) |
| Competitor prices (D41) | Prices (D49) |
| Production costs (D24) | Passthrough rates (H29) |
| Education levels (I21) | Passthrough rates (H29) |
| Trade costs (F19) | Passthrough rates (H29) |