Trading Tasks: A Simple Theory of Offshoring
Trading Tasks: A Simple Theory of Offshoring
Trading Tasks: A Simple Theory of Offshoring
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Introduction The Model ConclusionMarginal CostsCost <strong>of</strong> producing good j using home technology are given byZ Ic j = wa Lj (1 I) + w a Lj βt(i)di + sa HjR I0= wa Lj (1 I) + wa t(i)diLjt(I)= wa Lj Ω(I) + sa Hj0+ sa HjwhereΩ(I) = 1 I +R I0 t(i)dit(I)with Ω 0 (I) 0So possibility <strong>of</strong> <strong>of</strong>fshoring affects costs exactly as labor-augmentingtechnological changeGrossman and Rossi-Hansberg (Princeton University) A <strong>Simple</strong> <strong>Theory</strong> <strong>of</strong> <strong>Offshoring</strong> March, 2010 7 / 17
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