Foreign producer services can provide substantial benefits for domestic firms. We build on earlier monopolistic-competition models of intermediate producer services in this paper. Results show that: (1) while foreign services are partial-equilibrium substitutes for domestic skilled labour, they...

The authors present a means of evaluating the effects of customs-union formation by a decomposition of the overall welfare effect into two components: the consequences of induced changes in domestic prices; and the effects on income of adjustments in tariff rates and endogenous changes in the...

There exist two approaches in the literature concerning the multinational firm's mode choice for foreign production between an owned subsidiary and a licensing contract. One approach considers environments where the firm transfers primarily knowledge-based assets and assumes that knowledge is...

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...

A firm must decide whether to serve a foreign market by exporting, building a foreign branch plant , or licensing the production to an existing foreign producer. The ex istence of reputations implies that any licensing agreement must prov ide a licensee with the incentive to maintain the...

The first purpose of this paper is to specify certain microeconomic determinants of "external" economies and then analyze the consequences of these economies for production and welfare in a simple general-equilibrium model. The second purpose is to explore the circumstances under which the...

A model is developed in which the output of one traded sector (e.g., high tech) is produced using consultan ts who supply differentiated skilled services. An external economy is shown to exist, which in turn implies (1) the suboptimal supply of s killed specialists, (2) multiple equilibria, and...