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AbstractThis paper develops a two‐sector model of trade in goods and intermediate tasks that differ in tradability and skill intensity. A skill‐abundant country with high productivity is shown to offshore more unskilled tasks than skilled tasks, without relying on a particular correlation structure between tradability and skill intensity. With putty‐clay technology that allows retraining in the long run, transition from the non‐offshoring to the offshoring equilibrium generates wage and employment effects that switch from negative to positive as tradability declines, with the switches occurring at a higher degree of tradability for skilled tasks. This is consistent with the empirical literature.

This dissertation consists of three theoretical papers that investigate how trade and tariffs redistribute income and welfare between countries and within countries. In the first paper, we set a perfect competition model of trade in intermediate (tasks) and final goods. Trade in intermediate goods will create income redistribution within a developed country and across workers whose jobs are of a different nature. In the second paper, we set a monopolistic competition model of trade in product varieties. Tariffs and mutual trade liberalization will modify the pattern of trade in product varieties thereby causing welfare redistribution between countries of a similar development level. Finally, we set model of trade in final goods and intermediate goods in which the government from a developed country will promote domestic monopolies by imposing tariffs. The promotion of domestic monopolies will shift foreign rents and then redistribute income across countries with different development levels

This paper develops a New Trade Theory model modified with entry barriers, thereby creating a link between the traditional interests of development and industrial organization economists and research on international trade. I show that entry barriers cause the market size to become endogenous by creating rents. Furthermore, I prove that the endogeneity of market size has four implications. First, governments can use trade policy to shift foreign rents to their countries and enlarge their home markets. Second, endogenous market size magnifies the standard home-market effect. Third, the endogeneity of market size interferes with the unambiguous Pareto optimality of trade agreements. In particular, if rents are suffciently large and the country size is suffciently small, a trade agreement will negatively affect the country in question. Therefore, I consider a new research question: what are consequences of trade agreements in terms of welfare redistribution? Finally, I show that an increase in entry barriers increases the market size of large countries. If the market size increase is suffciently large, the country benefits. These results challenge the idea that higher entry barriers decrease welfare.