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...

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...

Is there evidence from China's pre-WTO accession period that newly imposed U.S. or EU import restrictions deflect Chinese exports to third markets? We examine this question by drawing on a newly constructed data set of U.S. and EU product-level import restrictions on Chinese trade imposed...

This paper analyzes whether complexity, measured by the number of skilled tasks that are performed in production, explains countries commodity trade structure. We modify the Romalis (<link/>) model to incorporate advantage differences in complexity across commodities together with differences in the...

We analyse a very rich and unique panel database that provides information on exports at the firm-product level. Motivated by the recent theory of multi-product firms, we investigate what determines the survival of products in the export mix to find that, in export dynamics, characteristics of...

Contrary to the prevailing interpretation, this paper shows that the central models of trade with heterogeneous firms (<link>Melitz 2003</link>; <link>Bernard et al. 2003</link>) exhibit ambiguous predictions for the exporter productivity premium. This prospect arises because of differences between theoretical and...

In this paper, we offer an explanation why globalization (falling trade costs) may increase the government incentive to block foreign takeover of domestic firms and increase its incentive to allow mergers among national firms. This creation of `national champions' occurs not only because the...

This study analyzes the impact of opening up markets on the diffusion of flexible manufacturing in a general equilibrium framework. With flexible manufacturing, suppliers can service a range of downstream industries and do not have to be concerned about being held up. Instead, the vertical...

Large distance and border effects on trade flows in some industries may result from the collusive division of geographic markets. In the Brazilian cement industry, traditional gravity equations fit the data well, yet limited regional flows are due to firms' strategic behaviour. Thanks to a...

Some cultural goods are consumed socially and are characterized by the same consumption network externalities as languages. Also, producers of new cultural goods in any one country draw on the stock of ideas generated by previous cultural production in all countries. For such goods, costless...