We formulate a two-country model with monopolistic competition and heterogeneous firms to reconsider labor market linkages in open economies. Labor-market imperfections arise by virtue of country-specific real minimum wages. Two principal experiments are considered. First, we show that trade...

This paper formulates an empirical model to estimate the impact of endogenous new regional trade agreement (RTA) membership on trade structure. The likelihood of new RTA membership is influenced by economic fundamentals such as country size, factor endowments, and trade and investment costs. In...

This paper provides an analysis of outsourcing and trade in a spatial model à la Hotelling. In this setting, we discuss the trade-off between transport cost related disadvantages and outsourcing-induced production cost advantages of a large economy. The model gives a rich picture of possible...

This paper studies tax competition between two countries for an international producer. The international producer chooses where to locate its headquarters and whether to serve the overseas market through exports or foreign direct investment (FDI) and local supply. We show that, in the absence...