This paper aims at shedding some light on the interactions between international trade and firms' heterogeneity, by proposing a tractable model consistent with the stylised facts unveiled by the recent empirical literature. The model describes, in a general equilibrium framework, two economies...

We present a unified dynamic framework to study the interconnections between international trade and business cycle models. We prove an aggregate equivalence between a competitive, representative firm model that has aggregate production externalities and dynamic trade models that feature...

Starting with Krugman (1980), much literature has analyzed how trade liberalization affects the economy based on the notion that trade is motivated by consumer’s love of variety. In this paper, I augment these preferences by the determinants of demand for heterogeneous products. The model...

There is strong evidence that different income groups consume different bundles of goods. This evidence suggests that trade liberalization can affect welfare inequality within a country via changes in the relative prices of goods consumed by different income groups (the price effect). In this...

We develop a product-differentiated model where the product space is a network defined as a set of varieties (nodes) linked by their degrees of substitutability (edges). We also locate consumers into this network, so that the location of each consumer (node) corresponds to her "ideal" variety....

We analyze the possibility and consequences of coalition-formation amongst suppliers of retail services. We first provide a framework in which producers of Substitutes have an incentive to Cluster in market places in order to attract consumers dispersed in space. Owing to spatial externalities,...