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 part of the production abroad reduces local labour...

This paper analyzes the welfare effects of subsidies to attract multinational corporations, in a setting where firms are heterogeneous in their productivity levels. I show that the use of a small subsidy raises welfare in the FDI host country, with the consumption gains from attracting more...

This paper agrues that the prices of intermediates may influence the pattern of foreign direct investment (FDI). In our model, two downstream firms select whether to serve each other's markets through exports of FDI, always sourcing the intermediate good or service at the location of production....

This paper presents a model in which final goods producers outsource intermediate input production. Intermediate inputs are differentiated and their production can be located at home or abroad. The model is used to examine competitive location policy in a (two-country) free trade agreement...

This paper extends the sufficient statistics approach to study international tax policy. International policy differs from domestic policies because i.) from the perspective of domestic policy makers the welfare weight on foreign agents lies below that of domestic agents, and ii.) behavioral...

This paper estimates the trade, revenue, and welfare effects of the proposed Caribbean Community (CARICOM)-Canada free trade agreement (FTA) on CARICOM countries using a partial equilibrium model. The welfare analysis also takes into account the Economic Partnership Agreement, which was signed...

This paper determines the distributional effects of internationaloutsourcing in a two sector Heckscher-Ohlin type model. It isshown that the factor-biased and the sector-biased impact ofinternational outsourcing discussed in the literature can be seenas special cases of the more general...

A two-country model of the FDI versus export decisions of firms is analysed. The analysis considers both the Cournot duopoly and the Bertrand duopoly models with differentiated products. It is shown that the static game is often a prisoners' dilemma where both firms are worse off when they both...

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...

In this paper, we adopt the vertical differentiation duopoly framework to give a full description of firms' relocation decisions, when the removal either of trade barriers or of restrictions on capital outflows/inflows (globalization) allows them to serve the domestic market through foreign...