This paper develops a model of international trade where firms are heterogeneous across capacity and productivity. A binding capacity constraint induces firms to raise prices in order to take advantage of access to new markets. This generates markets with a flexible competitive structure giving...

We examine how multinational firms strategically source production to mitigate the consequences of wage bargaining with workers. When wage bargaining pressure differs across countries, firms allocate production of goods with high markups toward countries with relatively competitive labor...

Recent studies have used import data to assess the impact of foreign varieties on prices and welfare for a home country. The reliance on import data has a number of limitations. First, these papers rely on goods categories defined by the Harmonized System. Second, they define varieties using the...

Recent studies have used import data to assess the impact of foreign varieties on prices and welfare for a home country. The reliance on import data has a number of limitations. First, these papers rely on goods categories defined by the Harmonized System. Second, they define varieties using the...

Product redesigns happen across virtually all types of products. While there is substantial evidence that new varieties of goods increase welfare, there is little evidence on the effect of product redesigns. We develop a model of redesign and exit decisions in a dynamic oligopoly model (a la...

Feenstra (1994) is widely implemented in international trade to estimate elasticities of substitution. Through a Monte Carlo experiment, simulated estimates suggest substantial biases due to weak instruments. However, the derivation of the elasticity of substitution drastically mitigates these...