In contrast to empirical evidence, recent theories of cross-border mergers and acquisitions (M&As) assume perfect knowledge transfers – from high to low productivity firms – between acquirer and target. Using the Melitz (2003) model of heterogeneous firms, we develop a matching model of...

Recent studies of border effects have focused on the intra-country and inter-country comparison of trade flows. It is found that borders have a negative impact on the size of cross-border trade. In order to estimate border effects on a regional level one needs not only data on inter-country but...

The empirical literature on city size distributions has mainly focused on the USA. The first major contribution of this paper is to provide empirical evidence on the evolution and structure of the West-German city size distribution. Using a unique annual data set that covers most of the 20th...

The 2008 Nobel prize for economics was awarded to Paul Krugman for three papers -Krugman (1979, 1980, 1991). In this paper we illustrate that, indeed, these three papers are closely connected. We present - a summary of - the papers using a unified framework. Central in the discussion is the...

Many modern trade and growth models are characterized by multiple equilibria. In theory the analysis of multiple equilibria is possible, but in practice it is difficult to test for the presence of multiple equilibria. Based on the methodology developed by Davis and Weinstein (2004) for the case...

For reasons of analytical tractability, new economic geography (NEG) models treat geography in a very simple way: attention is either confined to a simple 2-region or to an equidistant multi-region world. As a result, the main predictions regarding the impact of e.g. diminishing trade costs are...

The evolution of city growth is usually studied for relatively short time periods. The rise and decline of cities is, however, typically a process that takes many decades or even centuries. In this paper we study the evolution of Italian cities over the period 1300-1861. The first contribution...

Distance related variables typically vary in a cross-section dimension but less so in a time dimension across cities, regions, or countries. The enlargement of the EU or the introduction of the euro, however, can be looked upon as integration shocks that are informative of the consequences of...

China's Hukou system poses severe restrictions on labor mobility. This paper assesses the consequences of relaxing these restrictions for China's internal economic geography. We base our analysis on a new economic geography model. First, we obtain estimates of the important model parameters on...

By combining two large data sets (on international trade flows and on mergers and acquisitions – M&As), we are able to test two implications of Neary's (2003, 2004a) recent theoretical work. Analyzing M&As in a General Oligopolistic Equilibrium (GOLE) model incorporating strategic interaction...