Delocation, home wages and welfare

I present a general equilibrium model of delocation where firms move from the North to the South to benefit from low wages. As suggested by the large empirical litterature, welfare in the North increases when the host country is not technologically too lagged. Moreover, I show that vertical technology transfer to the South plays a major role in enhancing welfare of workers-consumers in the North and in the South. This analysis helps explaining the differences in empirical findings on production delocation.