We derive a simple equation to calculate the global welfare impact of the simultaneous reduction of trade costs between multiple country-pairs. Interestingly, we find that we obtain the same equation for a broad class of trade models. Moreover, balanced trade is mostly not required for the...

This paper develops a monopolistic competition model of multiproductfirms to explain the effect of trade liberalization on the product mix of multiproductexporting firms. The model shows that input-tariff reduction leads to increasesin a firm’s export values, especially for products that are...

The gravity model can explain the bilateral inter-country payment flows by currency very well. The economic sizes of the origin and destination countries significantly and positively affect bilateral payment flow denominated in any given currency, while distance and other factors that increase...

In this online appendix, we discuss extensions to our model of patent exhaustion. Section A.1 examines how the patent owner's incentive to invest in product quality (a proxy for the overall ex ante innovation) in a regime of presumptive exhaustion compares to a regime of absolute exhaustion. In...

This paper develops a growth model aimed at understanding the potential effects of globalization of production on rate of innovation, distribution of skilled labor income between the North and South, and welfare of skilled workers in both regions. We adopt a dynamic general equilibrium...

Price controls create opportunities for international arbitrage. Many have argued that such arbitrage, if tolerated, will undermine intellectual property rights and dull the incentives for investment in research-intensive industries such as pharmaceuticals. We challenge this orthodox view and...