The link between regional integration and intra-industry trade (IIT) has been under scrutiny since it has been first suggested by the European integration process. However, the lack of reliable data and the difficulty to find a robust model for IIT made this relationship difficult to prove. This...

We present a simple and tractable trade model of heterogeneous firms, endogenous quality choice, and endogenous markups. A key feature of the model is that competition not only lowers the cost cut-off between the firms that produce and those that exit, but it also raises the scope for quality...

This paper derives the necessary and sufficient condition for the simple gravity equation to hold: the market share of an exporting country is constant across all importing countries. Specialization is just one example satisfying this condition. It holds in a variety of situations where multiple...

Intra-industry trade (IIT) is a growing component of world trade, especially in developed countries. It generates less redistributive effects and lower demands for protection. In these countries, the empirical evidence on its determinants is wide, but it is not the case for Latin American...

This paper presents a model of international trade that features heterogeneous firms, relative endowment differences across countries, and consumer taste for variety. The paper demonstrates that firm reactions to trade liberalization generate endogenous Ricardian productivity responses at the...

This paper analyses the basic labour market inter-dependencies among coun - tries with intra-industrial trade and imper fectly competitive product and labour markets. The paper stresses two major channels through which increased integration may affect product markets and therefore in turn labour...

The objective of this study is to provide some empirical evidences on the existence of labor market adjustments according to smooth adjustment hypothesis (SAH) under the impact of intra-industry trade (IIT) considering the Portuguese case over a time span between 1995 and 2006. The main...

In a framework of a unionised international Bertrand duopoly with differentiated products, this paper analyses national labour market interdependencies and the consequences of trade liberalisation for union wages. The analysis suggests that national wages are likely to be strategic complements...

The dynamics of export market exit and firm closure have found limited attention in the new heterogeneous-firms trade literature. In fact, several of the predictions on firm survival and exit stemming from this new class of models are at odds with the stylized facts. Empirically, higher...

In this paper, we study the role of vertical product differentiation in the decision to allocate production between domestic and foreign plants. To do so, we examine the first wave of light-truck offshoring to Mexico that occurred due to substantially lower post-NAFTA trade barriers and a...