The robust empirical finding that exporting firms are systematically different from firms thatmerely serve domestic consumers has inspired the development of a new brand of tradetheory, the theory of heterogeneous firms and trade. The establishment of a canonical modeldue to Melitz (2003) has...

This paper provides a simple theory of geographical mobility which simultaneously explainspeople’s choice of residences in space and the location of industry. Residences are chosenon the basis of the utility which mobile households obtain across locations...