We develop a new analytical framework for both cross-border services trade and services trade through foreign affiliates, based on heterogeneous firms operating under oligopoly. This leads to direct predictions about choice of services delivery (mode of delivery) at the firm level, and about the...

Working with a panel dataset of of OECD countries over the decade 1994-2004, we examine linkages between cross-border trade and FDI in the service sectors. We first develop a consistent analytical framework for the application of the gravity model jointly to services trade and commercial...

Empirical studies of firms within industries consistently report substantial heterogeneity in measures of performance such as size and productivity. This paper explores the consequences of joint heterogeneity on the supply side (sellers) and the demand side (buyers) in international trade using...

This paper examines the interdependence between innovation and imports of intermediates, and their joint impact on productivity. We do so by developing a quantitative model with heterogeneous firms and international trade where firms can invest in R&D and source inputs internationally....

This paper studies the life-cycle dynamics of exporters and multinational enterprises (MNEs). We present a dynamic model of trade and MNE activity in which the mode of serving a market depends on the well-known proximity-concentration tradeoff. We show that the option of performing MNE...

This paper quantifies the origins of firm size heterogeneity when firms are interconnected in a production network. Using the universe of buyer-supplier relationships in Belgium, the paper develops a set of stylized facts that motivate a model in which firms buy inputs from upstream suppliers...

When trade costs are of the iceberg type (Samuelson 1952) and markups are independent of trade costs, relative prices across markets are distorted, but relative prices within markets are not. When trade costs depart from the analytically convenient iceberg type, distortion will also occur within...

Antidumping actions in the United States and EU are known to be linked to macroeconomic conditions. In part, this is because positive injury findings may be easier to make in a downturn. We explore the evidence for Mexico, one of the main ‘new’ antidumping-using countries. Injury...

Most of the large tariff reductions achieved in multilateral trade negotiations have involved tariff-cutting formulas such as the ‘Swiss’ formula. Wide variations in initial tariff rates between active participants, however, call for new approaches under the Doha Development Agenda. This...

In this paper we ask why the gravity model of international trade also work well for foreign direct investment (FDI) flows or multinational production (MP). We propose a model of trade and horizontal FDI, where the subsidiary is allowed to source inputs from the headquarters. Under certain...