Discussion paper

DP10574 Multi-product Offshoring

We show that the labor market effects of product line relocations within multi-product firms differ significantly from the relocation of production tasks within single-product firms. By incorporating offshoring of labor-intensive goods in a model with multi-product firms, and exploring its implications in partial and general equilibrium, we identify the cannibalization effect of offshoring as an important transmission mechanism within multi-product firms and show that this effect hits domestic labor demand in addition to the well-known relocation effect. Furthermore, we contribute to the growing literature on multi-product firms and trade by showing that lower offshoring costs tend to increase the range of products produced.


Eckel, C (2015), ‘DP10574 Multi-product Offshoring‘, CEPR Discussion Paper No. 10574. CEPR Press, Paris & London. https://cepr.org/publications/dp10574