We formulate a simple model that captures two recent hypotheses: (i) that countries with an abundant absolute endowment of skilled labour will be net exporters in R&D-intensive industries; and (ii) that countries with a large domestic market will be net exporters in scale-intensive industries....

This paper analyses how country size affects exchange rate policy and volatility. A hump-shaped relation between exchange rate variability and the size of countries is generated in the theoretical model: exchange rate variability increases with country size for small countries, but then...

Actual and potential competition is a powerful source of discipline on the pricing behavior of firms with market power. A simple model is developed that shows that the effects of import competition and domestic entry regulation on industry price-cost markups depend on country size. Barriers to...

We analyse the effects of trade liberalization on firms' decisions and profits, and on consumers' welfare, in a product differentiation model with countries of different size. Firms decide product specifications at the beginning of the game, in which autarky is followed by trade liberalization...

This paper studies the effects of changes in the internal market of the European Community in a partial equilibrium model of imperfect competition with economies of scale. The model is numerically calibrated to data on ten industries and the effects of two types of policy change are simulated....

Following the rationale for regional redistribution programmes described in the official documents of the European Union, this Paper studies a very simple multi-country model built around two regions: a core and a periphery. Technological spillovers link firms’ productivity in each of the two...

Recent research in contract theory views ownership as a substitute for complete contracts. In this paper this approach is applied to monetary integration. Countries face a coordination problem when conducting monetary policy: negative spillovers ensure uncoordinated policy generates too high...

This paper analyzes some of the consequences of economic and monetary union of the two Germanies. Particular emphasis is given to the real implications for the supply side of the German Democratic Republic and for resource flows between two economic regions.

This paper asks whether Germany was ever an economically integrated area. I explore the geography of trade costs in a new data set of about 40,000 observations on regional trade flows within and across the borders of Germany over the period 1885 – 1933. There are three key results. First, the...