Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25977
Authors: 
Kohler, Wilhelm K.
Year of Publication: 
2007
Series/Report no.: 
CESifo working paper 1932
Abstract: 
Germany exhibits a strong reduction in domestic manufacturing production depth (bazaar effect). I argue that this reflects an unbundling of comparative advantage. Using a model where Ricardian plus Heckscher-Ohlin-type comparative advantage relates to fragments of production, I compare a trading equilibrium where all fragments are located within a country with an equilibrium where input sub-bundles may be traded (offshoring). The model allows for several goods and two fragments, produced with high-skilled and low-skilled labor. I address wage and welfare effects under flexible wages, and under a minimum wage. I also explore trade policy implications and compare offshoring to migration.
Subjects: 
comparative advantage
offshoring
outsourcing
globalization
migration
JEL: 
F11
F16
F22
Document Type: 
Working Paper

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