Zhou, Yiming; Zeng, Dao-Zhi - 2012
We investigate the issue of offshoring in a model of two countries and one sector of increasing returns to scale. Our … model uncovers that in a setting of footloose capital, offshoring occurs and evolves in an inverted-U pattern when transport … costs decline. This result can explain China's offshoring soaring in the past decades as well as its recent decline. We also …