We set up a model of offshoring with heterogeneous producers that captures two empirical regularities of German … offshoring firms. There is selection of larger, more productive firms into offshoring. However, the selection is not sharp, and … offshoring and non-offshoring firms coexist over a wide range of the revenue distribution. An overlap of offshoring and non-offshoring …

multinationals, are less likely to rely on imported or internally provided services. -- international trade ; services ; off-shoring …

labor market effects of offshoring. While theory focuses on one-sector or two-sector models, empirical studies exploit … variation in offshoring across a large number of industries, typically including a linear offshoring term in the analysis …. Thereby, these studies implicitly assume a monotonic relationship between offshoring and labor market outcomes and ignore …

We study ex post outsourcing of production in an imperfectly discriminating contest, interpreted here as a research … tournament or a procurement contest for being awarded some production contract. We find that the possibility of outsourcing …, outsourcing reduces the procurement costs of inducing a given level of effort if the contest organizer can collect entry fees …

. Such outsourcing leads to increased wages for the remaining inhouse production. We find that stronger unions, which imply … higher domestic wages, reduce incentives for international outsourcing. Though somewhat surprising, this result provides a … theoretical reconciliation of the empirically observed trends of deunionization and increased international outsourcing in many …