We construct a model of offshoring with externalities and firm heterogeneity. Due to the presence of externalities …, temporary shocks like the Y2K problem can have permanent effects, i.e., they can permanently raise the extent of offshoring in … an industry. Also, the initial advantage of a country as a potential host for outsourcing activities can create a lock in …

This paper sets up a two-country model of offshoring with monopolistically competitive product and monopsonistically … competitive labour markets. In our model, an incentive for offshoring exists even between symmetric countries, because shifting … labour market power. However, offshoring between symmetric countries has negative welfare effects and therefore calls for …

We show that, even with flexible domestic wages, international outsourcing may worsen the welfare of the home country … and reduce the profits of all firms. If wages are rigid, outsourcing is welfare-improving if and only if the sum of the … subsidy may improve welfare. We also extend the model to a two-period framework. Delaying outsourcing can be gainful because …

between offshoring and exports. We model a world consisting of many advanced countries that trade differentiated goods among … differentiated good sector, which may be painful in the presence of frictions. -- offshoring ; multinational firms ; distance costs …

the equilibrium with an informal sector. -- offshoring ; informal sector ; maquiladoras ; trade and labor markets ; Mexico …

analytically in a general equilibrium model with heterogeneous firms that a fall in variable offshoring costs boosts trade in … call the export-magnification effect of offshoring. More specifically, lower barriers to offshoring reduce the average … costs of inputs for offshoring firms and allow more firms to source cheap foreign intermediates, which improves firm …

be partly explained by the export-magnification effect of offshoring. In a general equilibrium model with heterogeneous … firms we show analytically that a fall in variable offshoring costs boosts trade in differentiated final goods through an … intra-industry reallocation of resources towards the more productive firms. More specifically, lower barriers to offshoring …

We show that international outsourcing may reduce welfare of the outsourcing country by deterring market-entry, thus … showing a new effect which is different from the employment and the quality effects creating negative impacts of outsourcing …. Entry deterrence under outsourcing reduces domestic welfare if both the profit extraction and cost saving from outsourcing …

We set up a model of offshoring with heterogeneous producers that captures two empirical regularities of German … offshoring firms. There is selection of larger, more productive firms into offshoring. However, the selection is not sharp, and … offshoring and non-offshoring firms coexist over a wide range of the revenue distribution. An overlap of offshoring and non-offshoring …