Intro -- Contents -- Preface -- 1. Introduction -- 2. Comparative Advantage -- 3. Gainers and Losers -- 4. Scale and Scope -- 5. Across Firms within Industries -- 6. Offshoring and Outsourcing -- 7. Epilogue -- Notes -- Bibliography -- Index.

We introduce firm and worker heterogeneity into a model of innovation-driven endogenous growth. Individuals who differ in ability sort into either a research sector or a manufacturing sector that produces differentiated goods. Each research project generates a new variety of the differentiated...