We consider a simple model of market structure determination with discrete product differentiation and strategic interaction between firms. Our equilibrium concept is based on a set of relatively weak conditions that describe the profits of active and potential firms in a market. In our model,...

We build a dynamic model of competition between operating systems. Software applications run on each platform and are owned either by one of the OS companies or by an independent producer. Consumers are forward looking and face lock-in to an operating system due to switching costs. We also look...

Open economy macroeconomics typically takes as exogenously given important aspects of the pattern of international trade. This paper shows how heterogeneity in trade costs and heterogeneity in productivities work together to jointly determine features of the pattern of international trade and...

This paper finds a solution to some of the discrepancies between the data and what standard complete markets models predict. Specifically, those related to the cross-country correlations of consumption, output and factors of production. I match the data and get positive cross country comovements...

Three of the most important recent facts in global macroeconomics — the sustained rise in the US current account deficit, the stubborn decline in long run real rates, and the rise in the share of US assets in global portfolio — appear as anomalies from the perspective of...

It is well known that prices respond only partially, if at all, to changes in the nominal exchange rate. Exchange-rate pass-through, quite low for consumer prices, is far for complete for international prices as well (see the survey in Goldberg and Knetter [1997]). To the extent that incomplete...