Economic integration in Europe has had ambiguous effects on industry concentration. The literature has proposed various explanations of the empirical findings. The present paper provides an additional theoretical argument. We show that in a world of monopolistic competition, integration in it...

This paper sets up a two-country model in which there is one domestic manufacturer authorizing its product to a distributor in a foreign country to investigate the effect of parallel imports (PI) on product innovation of the former. The distributor can sell the product not only to its own market...

We develop a model to estimate simultaneously import shares, export shares, outward foreign direct investment and domestic profits for a large sample of U.S. manufacturing industries. In our model, trade barriers alter the ability of domestic market structure to influence domestic performance....

We introduce unemployment and endogenous selection of workers into different skill-classes in a trade model with two sectors and heterogeneous firms. This allows us to study the distributional consequences and the skill-specific unemployment effects of trade liberalization. We show that the...

We examine the qualitative and quantitative predictions of a heterogeneous firm model à la Melitz (2003) in the context of the Canada - US Free Trade Agreement (CUSFTA) of 1989. We calibrate our model to the pre-trade liberalization stage, simulate the trade liberalization, and compute the...

This paper analyses the implications of bargaining between buyers and sellers on the competitive outcome in a homogeneous good industry. Bargaining creates a competitive equilibrium in which some inefficient sellers coexist with efficient ones leading to productivity dispersion. Rival cost...