The welfare effects of repealing the U.S. Offshore Assembly Provision

Mendez, JoséA.

doi:10.1016/0022-1996(93)90064-5

Cited by 10 publications

(8 citation statements)

References 11 publications

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“…When the United States imports products that are assembled abroad, the OAP exempts from duty that portion of the US.imported final product that can be attributed to U.S. components. The general finding in this area, as demonstrated by Finger (1976) and Mendez (1993), is that the OAP has increased the activity of US. parts industries at the same time that it has reduced the activities of U.S.…”

Section: Trends In Foreign Trade Zone Usage By Automobile Producersmentioning

confidence: 91%

Explaining Domestic Content: Evidence from Japanese and U.S. Auto Production in the U.S.

Swenson

1996

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Section: Trends In Foreign Trade Zone Usage By Automobile Producersmentioning

confidence: 91%

Explaining Domestic Content: Evidence from Japanese and U.S. Auto Production in the U.S.

Swenson

1996

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“…The model was selected because it is more general than that of Baldwin and Murray (1977) but still tractable. More sophisticated models, such as that of Mendez (1993), could not be used because data on US shipments are not sufficiently disaggregated. 2 The model implicitly assumes that domestic supply is perfectly elastic, so that the price of the domestically produced good is constant.…”

Section: The Modelmentioning

confidence: 99%

“…The elasticity of substitution between US apparel imports from different sources is assumed to lie between 3 and 4.5. Mendez (1993) calculates a value of about 4.5 for the elasticity of substitution and this value is adopted as an upper bound. The USITC (1992) uses values ranging from 0.9 to 3 but because the elasticity of import demand is estimated to lie between 1.5 and 2.5, it is unlikely that the elasticity of substitution would be much less than 3.…”

Section: Datamentioning

confidence: 99%

“…Barring the repeal of this provision, however, offshore assembly in the Dominican Republic does not appear to be seriously threatened by foreseeable shifts in US and global trade policies. Product by Three Digit SITC Code 19911992199319941995Average Annual Growth Rate, Growth Rate, 1991-95 1994to 1995 Table 2 shows that production sharing in the Dominican Republic increased dramatically between 1988 and 1994. Both the total and dutiable value of the Dominican Republic's 9802.00.80 exports to the US more than tripled.…”

Section: Introductionmentioning

confidence: 97%

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Offshore Assembly and the Dominican Republic

Devault

1997

World Economy

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“…16 16 The traditional literature on vertical integration uses a Leontieff production structure. See Greenhut and Ohta (1979) or Mendez (1993) for an application to OAP. Yi (2003) creates a more elaborate three‐ stage production structure. …”

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confidence: 99%

Competition and the location of overseas assembly

Swenson

2007

Canadian J of Economics

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Abstract:How does international competition affect overseas outsourcing? While it is commonly believed that international competition enables firms to desert high cost countries in favor of low wage locations, the frequency of such responses may be reduced if the movement of outsourcing activities involves sunk costs. To put these factors in perspective, I study the production decisions of participants in the U.S. overseas assembly program (OAP). A number of interesting regularities emerge. First, the strong positive effect of prior participation on current OAP participation probabilities suggests that sunk costs influence outsourcing choices. Such production persistence is especially strong among foreign assemblers who are responsible for completing a large percentage of value-added. Second, increases in own-country costs and declines in competitor-country costs reduce participation probabilities. In addition, while these persistence and cost effects characterize all overseas assembly choices, these effects are much larger for outsourcing in developing countries. Finally, outsourcing responses appear to reflect differences in "market thickness", as cost sensitivity generally rises with competitor presence. Taken together, these observations provide empirical support for modeling approaches that feature search costs and partner availability as determinants of outsourcing decisions.JEL Codes: F1, F2

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The welfare effects of repealing the U.S. Offshore Assembly Provision

Cited by 10 publications

References 11 publications

Explaining Domestic Content: Evidence from Japanese and U.S. Auto Production in the U.S.

Explaining Domestic Content: Evidence from Japanese and U.S. Auto Production in the U.S.

Offshore Assembly and the Dominican Republic

Competition and the location of overseas assembly

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