One of the most notable features of literature about "new economic geography" is a close association between theoretical and empirical work. In contrast to earlier research, theoretical studies are often much more strongly focused on real-world phenomena. At the same time, empirical work is...

A growing literature suggests that high-income countries export high-quality goods. Two hypotheses may explain such specialization, with different implications for welfare, inequality, and trade policy. Fajgelbaum, Grossman, and Helpman (JPE 2011) formalize the Linder (1961) conjecture that home...