@article{Baldwin:293946,
      recid = {293946},
      author = {Baldwin, Richard E and Okubo, Toshihiro},
      title = {International trade, offshoring and heterogeneous firms},
      address = {2014},
      number = {ARTICLE},
      abstract = {Recent trade models determine the equilibrium distribution  of firm-level efficiency endogenously and show that freer  trade shifts the distribution towards higher average  productivity because of entry and exit of firms. These  models ignore the possibility that freer trade also alters  the firm-size distribution via international firm migration  (offshoring); firms must, by assumption, produce in their  “birth nation.”We show that when firms are allowed to  switch locations, new productivity effects arise. Freer  trade induces the most efficient small-nation firms to move  to the large nation. The large country gets an “extra  helping” of the most efficient firms while the small  nation’s firm-size distribution is truncated on both ends.  This reinforces the large-nation productivity gain while  reducing or even reversing the small-nation productivity  gain. The small nation is nevertheless better off allowing  firm migration.},
      url = {http://repository.graduateinstitute.ch/record/293946},
      doi = {https://doi.org/10.1111/roie.12096},
}