A direct comparison is made between two models of intra-industry trade: the love-of-varieties model and the Armington model. The former is a textbook model that is theoretically appealing, but seldom used in applied studies of trade policy. The latter has been widely used in CGE modelling, but...

Can tariff-jumping foreign investment be beneficial? It is well known that tariff-jumping foreign investment is costly. The tax paid by foreign firms may not be sufficient to offset that cost. We present a model that incorporates two additional benefits of foreign investment. Being more...

Comparative advantage is the most important foundation for world trade. Yet comparative advantage is usually explained by a series of unrelated models. We present a general model that incorporates all three distinct sources of comparative advantage: differences in technologies, differences in...

A pressing challenge for China is determining where to accommodate millions of migrant workers displaced by the closing of many export-oriented factories. The current global financial crisis has exposed the fragility of the export-led growth strategy China has adopted over the past 30 years. Is...