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Gravity as both fact and theory is one of the great success stories of recent research on international trade, and has featured prominently in the policy debate over Brexit. We first review the facts, noting the overwhelming evidence that trade tends to fall with distance. We then introduce some...
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We derive exact conditions relating the distributions of firm productivity, sales, output, and markups to the form of demand in monopolistic competition. Applications include a new “CREMR” demand function (Constant Revenue Elasticity of Marginal Revenue): it is necessary and sufficient for...
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A Bayesian supply function equilibrium is characterized in a market where firms have private information about their …, competitiveness is affected by the parameters of the information structure: supply functions are steeper with more noise in the … the collusive level. Furthermore, competition in supply functions aggregates the dispersed information of firms (the …
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