International oligopoly, barriers to outsourcing and domestic employment

Subhayu Bandyopadhyay, Sugata Marjit, Lei Yang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

4 Citations (Scopus)

Abstract

In this paper we analyze the impact of barriers to outsourcing on domestic employment in an oligopolistic context. We show that although an outsourcing tax makes domestic labour cheaper, its employment effect is ambiguous due to strategic considerations. Analyzing international policy interdependence, we also show that, although a unilateral tax (subsidy) by a country must raise its domestic employment, this may be counterproductive in a Nash policy equilibrium. Finally, both a credit crisis and increased product differentiation tend to worsen the employment effects of an outsourcing tax. Our central findings are robust to both Bertrand and Cournot modes of competition.
Original languageEnglish
Pages (from-to)1372-1386
Number of pages15
JournalCanadian Journal of Economics
Volume47
Issue number4
DOIs
Publication statusPublished - 1 Jan 2014

ASJC Scopus subject areas

  • Economics and Econometrics

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