Extensive Margins of Offshoring and Exporting

This paper derives new comparative statics within a two-country version of the recent offshoring model by Antràs, Fort, and Tintelnot (2014) with nonprohibitive costs of exporting final goods. One key finding is that an asymmetric trade liberalisation might very well imply that the fractions of offshorers and exporters increase in one country and decrease in the other country. This model outcome occurs when competition enhances in a country experiencing a decline in its costs of international trade. The fractions of offshorers and exporters certainly increase in a small open economy experiencing a decline in its costs of international trade. These strong industry-level results appear even though the comparative statics at the firm level are nonmonotone and asymmetric across the heterogeneous firms.