This paper provides a novel explanation for the dominant role of multinational corporations (MNCs) in international trade: after being acquired by an MNC, firms face lower trade frictions in and around the network of countries in which their parent has a presence. We provide a model of firms'...

We study the role of firm heterogeneity and imperfect competition for global production networks and the gains from trade. We develop a quantifiable trade model with two-sided firm heterogeneity, matching frictions, and oligopolistic competition upstream. More productive buyers endogenously...