Can tariff-jumping foreign investment be beneficial? It is well known that tariff-jumping foreign investment is costly. The tax paid by foreign firms may not be sufficient to offset that cost. We present a model that incorporates two additional benefits of foreign investment. Being more...

Comparative advantage is the most important foundation for world trade. Yet comparative advantage is usually explained by a series of unrelated models. We present a general model that incorporates all three distinct sources of comparative advantage: differences in technologies, differences in...