Innovations in information- and telecommunication technology render the proximity requirement between business partners obsolete and make business service outsourcing via cross-border trade more feasible. Although the (service-led) growth prospects have been widely discussed, evidence at the...

We address the trade effect of restrictive product standards on the margins of trade, by matching a detailed panel of French firm exports with a new database compiling the list of Sanitary and Phyto-Sanitary regulatory measures that have been raised as a concern in dedicated committees of the...

This paper develops an oligopolistic model of international trade with heterogeneous firms and endogenous R&D to examine how trade liberalization affects firm and industry productivity, as well as social welfare. We identify four effects of trade liberalization on productivity: (i) a direct...

Trade economists traditionally study the effect of lower variable trade costs. While increasingly important politically, technical barriers to trade (TBTs) have received less attention. Viewing TBTs as fixed regulatory costs related to the entry into export markets, we use a model with...

Cultural proximity increases bilateral trade flows through a trade-cost and a bilateral-affinity (preferences) channel. Conventional measures of cultural proximity, such as common language, common religion, etc., do not allow to separately quantify those channels empirically. We argue that...

The distance puzzle has been wildly discussed in the literature since Leamer and Levinsohn (1995) shed the light on it. This puzzle simply says that "the world is not getting smaller": distance still matters to account for trade. This is reflected in a decreasing distance of trade (DOT), or in a...

Gravity equations have been used for more than 50 years to estimate ex post the partial effects of trade costs on international trade flows, and the well-known - and traditionally presumed exogenous – “trade-cost elasticity” plays a central role in computing general equilibrium trade-flow...

In this paper we provide a new explanation for the increase in world trade over the last two decades. We show analytically in a general equilibrium model with heterogeneous firms that a fall in variable offshoring costs boosts trade in differentiated final goods through an intra-industry...

This paper examines how trade liberalization affects the innovation incentives of firms, and what this implies for industry productivity. For this purpose we develop a reciprocal dumping model of international trade with heterogeneous firms and endogenous R&D. Among the robust results that hold...