International trade can induce changes in production structure across domestic regions as well as across industries. While the literature is well established on the latter issue, the former issue has been examined less. We present a two-country model with explicit incorporation of two regions in...

We present a two-country model with explicit incorporation of two regions in the home country and one region in a foreign country. Each region consists of two types of workers: skilled workers, freely mobile across domestic regions, are required to set up a firm, whereas unskilled workers are...