While there is a consensus in the literature that offshoring has a polarising effect on the skill structure of labour … demand, little is known about its impact on the capital side. In this paper, we analyse the effect of offshoring on the …, we document that offshoring reduces the relative demand for non-ICT capital, thereby also polarising the demand for …

-agent hires the sub-agent (outsourcing). We show that insourcing is always optimal when the principal can perfectly process the … prime-agent's report. When the principal's information process is limited, however, outsourcing can be the prevailing mode … no possibility of collusion arises with outsourcing. …