Grossman, Gene M.; Rossi-Hansberg, Esteban - In: The Quarterly Journal of Economics 125 (2010) 2, pp. 829-858
We study a world with national external economies of scale at the industry level. In contrast to the standard treatment with perfect competition and two industries, we assume Bertrand competition in a continuum of industries. With Bertrand competition, each firm can internalize the externalities...