American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Industry Dynamics of Offshoring: The Case of Hard Disk Drives
American Economic Journal: Microeconomics
vol. 10,
no. 1, February 2018
(pp. 67–101)
(Complimentary)
Abstract
This paper uncovers a novel pattern of offshoring dynamics in a high-tech industry, and proposes a structural model to explain it. Specifically, the hard disk drive industry (1976-1998) witnessed massive waves of entry, exit, and the relocation of manufacturing plants to low-cost countries, in which shakeouts occurred predominantly among home firms and almost all survivors were offshore firms. I build and estimate a dynamic offshoring game with entry/exit to measure the benefits and costs of offshoring, investigate the relationship between offshoring and market structure, and assess the impacts of hypothetical government interventions.Citation
Igami, Mitsuru. 2018. "Industry Dynamics of Offshoring: The Case of Hard Disk Drives." American Economic Journal: Microeconomics 10 (1): 67–101. DOI: 10.1257/mic.20150256Additional Materials
JEL Classification
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- F14 Empirical Studies of Trade
- L13 Oligopoly and Other Imperfect Markets
- L24 Contracting Out; Joint Ventures; Technology Licensing
- L63 Microelectronics; Computers; Communications Equipment
- O14 Industrialization; Manufacturing and Service Industries; Choice of Technology