We propose a multi-country general equilibrium model with three sectors and heterogeneous firms to analyze the linkages between offshoring and exports. We model a world consisting of many advanced countries that trade differentiated goods among each other and one "workbench country" that...

We derive gravity equations from three different general equilibrium models incorporating multinational firms. We show that gravity equations are particularly adapted to the analysis of foreign affiliates' activities of multinational firms. However, the different theoretical models lead to...