The 2008 Nobel prize for economics was awarded to Paul Krugman for three papers - Krugman (1979, 1980, 1991). In this paper we illustrate that, indeed, these three papers are closely connected. We present - a summary of - the papers using a unified framework. Central in the discussion is the...

With the completion of EMU, tax competition and, more in general, locational competition is high on the EU policy agenda. In contrast to the standard neo-classical reasoning, recent advances in the theory of trade and location have shown that tax competition does not necessarily lead to a race...

In contrast to empirical evidence, recent theories of cross-border mergers and acquisitions (M&As) assume perfect knowledge transfers - from high to low productivity firms - between acquirer and target. Using the Melitz (2003) model of heterogeneous firms, we develop a matching model of...

Place names, or toponyms, provide insight into the initial geographical characteristics of settlements. We present a unique dataset of 3,705 German toponyms that includes the date of the first historical record mentioning the settlement and the date it was granted city rights. We show that the...

The literature on China indicates that the concentration of economic activities in China is less than in other industrialized countries. Institutional limits are largely held responsible for this finding (e.g. the Hukou system); firms and workers are not able to take full advantage of the...

Lumpiness of production factors within a country might overturn the predictions for the structure of trade by the factor-abundance (HO) model. Trade patterns, as predicted by this model, can both be magnified or reversed by uneven concentration of production factors within a country. Cities are...

In the famous debate between Keynes and Ohlin on the transfer problem, the interaction between non-traded goods and unemployment complicates the analysis considerably. We analyze these issues using four different models to conclude that Keynes's concern regarding the large burden imposed on...