This paper studies how firms' offshoring decisions shape a country's domestic production networks. We develop a model … foreign suppliers, due to costly communication. Triggered by foreign countries' export supply shocks, firms start offshoring … net effect of offshoring on a firm’s domestic production networks depends on the relative strength of the three effects …

firms that are consistent with stylized facts from the recent empirical literature. -- multinational firms ; outsourcing … ; intra-firm trade ; offshoring ; vertical FDI …