This paper develops a micro-simulation framework for multinational entry and sales activities across countries. The model is based on Eaton, Kortum, and Kramarzs (2010) quantitative trade model adapted towards multinational production. Using micro data on Japanese manufacturing firms, we...

Using a Melitz-style model of heterogeneous firms, Baldwin and Okubo (2006) recently presented a theoretical model in which self-sorting occurs and more productive factories choose to locate in more productive areas. The model suggests that firm-specific factors and regional factors affect each...