This paper constructs a dynamic scale-free North-South model of trade with endogenous innovation. In the North two types of R&D races take place simultaneously within each industry. One is local-sourcing-targeted R&D race, which results in the winner firm manufacturing in the North. The other is...

This paper develops a model of strategic outsourcing. With trade liberalization in the intermediate-product market, a domestic firm may choose to purchase a key intermediate good from a more efficient foreign producer, who also competes with the domestic firm for a final good. This has a...