The first essay develops and tests a monopolistic competition model with a more general, but still tractable, CES preference structure that nests Krugman (1980) and Armington (1969) style models. With limited love of variety the consumer faces a trade-off between buying more varieties or higher...

A major feature of globalization has been the enormous increase in international flows of goods and services: countries are now trading much more with each other. In this article, the authors demonstrate the greater role vertical specialization is playing in these increased flows. Vertical...