We develop a novel theory of mis-allocation within firms (rather than between firms) due to managers' empire building. We introduce an in- ternal capital market into a two-factor model of multi-segment firms. We show that more open markets impose discipline on competition for capital within...

This paper develops a novel theory of capital mis-allocation within firms that stems from managers’ empire building and informational frictions within the organization. Introducing an internal capital market into a two-factor model of multi-segment firms, we show that international competition...

Presents a new research program that is transforming the study of international trade. Until a few years ago, models of international trade did not recognize the heterogeneity of firms and exporters, and could not provide good explanations of international production networks. Now such models...

Intro -- Contents -- Preface -- Introduction -- 1. Contractual Frictions and Global Sourcing -- 2. The Boundaries of the Multinational Firm: An Empirical Analysis -- 3. Contract Enforcement, Comparative Advantage, and Long-Run Growth -- 4. The Dynamics of Firm-Level Adjustment to Trade...