This paper extends the firm heterogeneity model of Melitz (2003) by introducing a new concept of endogenous investments in process R&D. The novelty is that if a firm invests more in R&D its expected innovation return hazard rate stochastically dominates the return of less R&D investments. Due to...

Welfare gains from increasing product variety are an important  source of the gains from international trade. Recent empirical studies have largely focused on measuring the gains from an increased variety of imports. Trade theory, however,  suggests that international trade heavily affects the...

Why do some countries join the EU earlier than others, why do others wait? Inorder to answer this question we apply the theory of investment under uncertainty (Dixit andPindyck, 1994) to the decision on EU-membership. We develop a simplified model of twoperiods to study how the value of waiting...

In Medien und Öffentlichkeit ist die Meinung, dass die infolge von Globalisierung und Strukturwandel frei- gesetzten Arbeitskräfte zu den Verlierern der Globalisierung gehörten, weit verbreitet. Gemäss Handelsthe- orie muss dem allerdings nicht so sein. Schliesslich führt die Globalisierung...