This paper provides an analysis of outsourcing and trade in a spatial model à la Hotelling. In this setting, we discuss the trade-off between transport-cost-related disadvantages and outsourcing-induced production cost advantages of a large economy. The model gives a rich picture of possible...

This paper provides an analysis of outsourcing and trade in a spatial model à la Hotelling. In this setting, we discuss the trade-off between transport-cost-related disadvantages and outsourcing-induced production cost advantages of a large economy. The model gives a rich picture of possible...

This paper presents an AR(1) model in the spirit of Hausman and Taylor zero differences between actual and in-sample predicted trade flows. Large systematic differences between observed and in-sample predicted trade flows only indicate model misspecification and econometric problems....