DP7775 Trade-in-goods and trade-in-tasks: An Integrating Framework

Author(s): Richard Baldwin, Frédéric Robert-Nicoud
Publication Date: April 2010
Keyword(s): globalisation, offshoring, trade in tasks, trade theory
JEL(s): F11, F12, F16
Programme Areas: International Trade and Regional Economics
Link to this Page: http://www.cepr.org/pubs/dps/DP7775

Our paper integrates results from trade-in-task theory into mainstream trade theory by developing trade-in-task analogues to the four famous theorems (Heckscher-Ohlin, factor price equalisation, Stolper-Samuelson, and Rybczynski) and showing the standard gains-from-trade theorem does not hold for trade-in-tasks. We show trade-in-tasks creates intraindustry trade in a Walrasian economy, and derive necessary and sufficient conditions for analyzing the impact of trade-in-tasks on wages and production. Extensions of the integrating framework easily accommodate monopolistic competition and two-way offshoring/trade-in-tasks.