Industry Dynamics of Offshoring: The Case of Hard Disk Drives | Zendy

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Industry Dynamics of Offshoring: The Case of Hard Disk Drives

Author(s) -

Mitsuru Igami

Publication year - 2018

Publication title -

american economic journal microeconomics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 5.339

H-Index - 40

eISSN - 1945-7685

pISSN - 1945-7669

DOI - 10.1257/mic.20150256

Subject(s) - offshoring , relocation , business , government (linguistics) , dynamics (music) , industrial organization , marketing , computer science , outsourcing , linguistics , philosophy , physics , acoustics , programming language

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.

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