In a two-country Hotelling type duopoly model of price competition, we show that parallel import (PI) policy can act as an instrument of strategic trade policy. The home firm's profit is higher when it <i>cannot</i> price discriminate internationally if and only if the foreign market is sufficiently...

Numerous gravity applications have resorted to panel data econometric techniques over the past decade. However, with the theory of gravity being so far only static, these estimations lack solid structural dynamic foundations. As a consequence, a consensus on a unified dynamic gravity estimation...

In this paper, we analyze the offshoring decision of firms whose production process is characterized by a particular sequence of steps. International cost differences vary non-monotonically along the production chain, and moving unfinished goods across borders incurs transport costs. We show...

In theoretical literature it is common to make the assumption that in a multi-country, multi-good world, the direction of trade (import and export by commodity) is predetermined and fixed for each good for each country. We consider a simple three-country, three-good, pure-exchange model with CES...

What are the impacts of free trade agreement on the welfare of different types of workers in a developed country? What is the impact of free trade on a developed country's income disparity? What is the effect of free trade on the skill distribution of a developed country? The objective of this...

The simple gravity equation explains a great deal about the data on bilateral trade flows and is consistent with several theoretical models of trade. We argue that alternative theories nevertheless predict subtle differences in key parameter values, depending on whether goods are homogeneous or...

We utilize a random-matching model to examine the relationships between market frictions and international trade. In our setting, an individual may choose to search abroad where she may have a cost advantage, but is less likely to meet potential trading partners, owing to higher market...

We argue that different industrial ownership structures generate different incentives for firms to engage in FDI. A comparison is made between (partially) cooperative structures such as the Japanese and Korean systems and competitive structures such as U.S. firms. It is found that ownership...

In this paper we develop a North-South trade model in which the South produces food and the North produces both food and a high-tech good. Food production is undertaken by unskilled workers, while the high-tech product is made only by horizontally differentiated skilled workers. Owing to the...

Constructing a two-good (competitive and imperfectly-competitive goods), two-primary factor (capital and labor) and two-country model of international trade where the imperfectly-competitive sector is subject to increasing returns to scale, we establish an oligopolistic version of the...