Yingyi Tsai

INTERNATIONAL OUTSOURCING AND WELFARE REDUCTION: AN ENTRY-DETERRENCE STORY

We show that international outsourcing may reduce welfare of the outsourcing country by deterring market entry, thus showing a new effect which is different from the employment and the quality effects creating negative impacts of outsourcing. Entry deterrence under outsourcing reduces domestic welfare if both the profit extraction and cost saving from outsourcing are sufficiently small.

Intellectual Property Rights and the Quality of Transferred Technology in Developing Countries

This paper addresses the effects of a stronger patent system in developing countries on the quality of transferred technology and welfare. We show that a stronger patent system can reduce the quality of licensed technology. The presence of technology licensing may encourage the developing country to adopt a stronger patent system compared with the situation where licensing is not an option.

Why Do Firms Engage in Multi-Sourcing?

We provide an explanation for multi-sourcing, which is often found in the real world and refers to the situation where a final goods producer acquires homogenous components from different suppliers. In the presence of imitation under outsourcing, multi-sourcing helps to deter entry by the suppliers into the final goods market and enhances profitability of the outsourcing firm.