Recent theoretical research shows that exporters are more productive than nonexporters. We show that this result holds almost trivially for the case of constant marginal cost of production, as mainly assumed in the literature, but it may not hold true if the marginal cost is not constant. Our...

We study optimal contracting in a setting where a firm repeatedly interacts with multiple workers, and can compensate them based on publicly available performance signals as well as privately reported peer evaluations. If the evaluation and the effort provision are done by different workers (as...

Although empirical evidence shows that a lower trade cost and higher FDI may go hand in hand, the well-known “proximity-concentration” hypothesis does not support this view. We provide a simple explanation for this phenomenon. We show that a lower trade cost on the intermediate goods (with...

Although empirical evidence shows that a lower trade cost and higher FDI may go hand in hand, the well-known "proximity-concentration" hypothesis does not support this view. We provide a simple explanation for this phenomenon. We show that a lower trade cost on the intermediate goods (with or...

We highlight a novel trade-off with the use of break-up fees in employment contracts in the presence of firm-specific matching gains and asymmetric learning about workers' quality. If the market infers the workers' quality from job-assignments (or, "promotions"), it leads to inefficiently few...

Firms often motivate their workers with implicit incentive contracts. Since these contracts are sustained through the threat of future retaliations by the workers, their sustenance hinges on the worker's observability of the game's history. When a long-lived firm hires a sequence of short-lived...