A significant reduction in global greenhouse gas emissions requires international cooperation in emission abatement as well as individual countries' investment in the adoption of abatement technology. The existing literature on climate policy pays insufficient attention to small countries, which...

We consider network effects in the monopolistically competitive model of trade developed by Melitz and Ottaviano (2008). We show that a larger network effect intensifies competition by allowing more-productive firms to raise prices and earn higher profits, but forcing less-productive firms to...