We employ theory-grounded sectoral gravity models to estimate the effects of various steps of European product market integration on trade flows. We embed these estimates into a static Ricardian quantitative trade model featuring 43 countries and 50 goods and services sectors. Paying attention...

The business literature suggests that exporters either use trade intermediaries or own foreign sales representations. Standard trade models are silent about this choice. We develop a model where producers differ with respect to competitive advantage and where trade intermediaries arise...

We propose a stylized monopolistic competition model of international trade where firms differ with respect to the expected economic lifetime of their innovations. Upon entry, they receive a commonly observed signal which is updated over time. Jointly with partial irreversibility of investment,...

Recent trade theory in the Krugman (1980) tradition predicts that countries with larger market size enjoy higher levels of total factor productivity (TFP) - and equivalently of real per capita income or welfare - as a smaller fraction of spending on inputs is affected by trade costs. However, in...

We use an augmented gravity model to revisit the effect of similarity in income distributions on bilateral trade flows. Disentangling supply-side and demand-side mechanisms, we document a robust new regularity: while differences in average incomes between two countries increase trade,...