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The Origin of GoodsRules of Origin in Regional Trade Agreements$
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Olivier Cadot, Antoni Estevadeordal, Akiko Suwa-Eisenmann, and Thierry Verdier

Print publication date: 2006

Print ISBN-13: 9780199290482

Published to Oxford Scholarship Online: May 2006

DOI: 10.1093/0199290482.001.0001

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The impact of Rules of Origin on strategic outsourcing: an IO perspective

The impact of Rules of Origin on strategic outsourcing: an IO perspective

(p.35) 2 The impact of Rules of Origin on strategic outsourcing: an IO perspective
The Origin of Goods

Olivier Cadot (Contributor Webpage)

Antoni Estevadeordal

Akiko Suwa-Eisenmann (Contributor Webpage)

Thierry Verdier

Oxford University Press

This chapter considers the impact of Rules of Origins (ROOs) on two aspects of the international production fragmentation process. First, in an imperfect competitive environment with ‘strategic outsourcing’ by firms, ROOs can fullfill the function of a commitment device to be more or less aggressive in the process of international fragmentation. Second, in a context when firm-suppliers relationships are characterized by some degree of contract incompleteness, ROOs may have important implications for the incomplete contractual problems existing between downward foreign firms and potential suppliers, especially by the way they influence the outside options of the concerned parties. ROOs in such a case can be effective even without been observed as binding in equilibrium. Normative and policy implications are derived.

Keywords:   rules of origins, strategic outsourcing, incomplete contracting

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