This paper investigates the importance of firm heterogeneity for our understanding of the aggregate volume of cross-country multinational sales. Recent theoretical literature points out a sorting out firms with respect to their internationalization strategy according to their productivity. Using...

We derive a gravity equation from two general equilibrium models with multinational firms: a symmetric firm model where foreign affiliates rely on specific intermediate goods and a heterogenous firms model with country-specific fixed costs. Although the reduced form gravity equation is the same,...