chapter compares the impact of international trade in intermediate inputs (offshoring) on wage inequality in two distinct but … similar frameworks. In the first framework the profitability of offshoring is based on increasing returns to scale on the task …-level, whereas the second framework relies on differences in relative factor endowments of the two countries involved in offshoring …

I analyse firms organisational choices when they face uncertainty about institutional conditions in foreign locations … increasing offshoring activity increases competition in the final goods market, leading to a progressive vertical disintegration … of the supply chains. Initially, the firms that decide to explore offshoring potential choose integration. As competition …