This paper presents a dynamic general equilibrium model of trade between two advanced countries in which both innovation and skilled acquisition rates are endogenously determined. The model offers a North-North (as opposed to a North-South) trade explanation for increasing relative wage...

We use a specific-factor model to examine the conditions under which policy makers are able to increase aggregate production in high- tech goods by production or R&D-subsidies in the short and long-run.

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Productive factors such as human and physical capital are accumulated and trade can affect the steady-state levels of such factors. Consequently, trade liberalization will have dynamic effects on output and welfare as the economy moves to its new steady state, in addition to its usual static...

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We use a specific-factor model to examine the conditions under which policy-makers are able to increase aggregate production of high-tech goods by production or R&D-subsidies in the short and long run. The difficulties for the policy-makers in designing a subsidy scheme that succeeds in...

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The theory of the firm suggests that firms can respond to poor contract enforcement by vertically integrating their production process. The purpose of this paper is to examine whether firms' integration opportunities affect the way institutions determine international trade patterns. We find...