If a profit‐maximizing firm credibly commits to an employment‐enhancing corporate social responsibility objective in negotiations with a trade union, the union can reduce its wage demands. Lower wages, ceteris paribus, raise profits, while the increase in employment enhances the payoff of a...

External reference pricing imposes a price cap for drugs based on prices in other countries. I study the choice of reference countries and pricing rules in a three‐country framework. If the manufacturer sells to all three countries, the minimum price rule yields the lowest drug price. If the...

In light of the recent tit‐for‐tat trade dispute between China and the US, interest in quantifying the effects of the so‐called Phase One agreement has risen. To this end, this paper quantifies the impact of the asymmetric managed trade agreement using such a multi‐country open‐economy...

China is perceived to rely on subsidizing firms in targeted industries to improve their performance and stay competitive. We implement an approach that allows for the joint estimation of direct and indirect effects of subsidies on subsidized and non‐subsidized firms. We find that firms that...

In this paper, I study the effect of parallel trade (cross‐border resale of goods without the authorization of the manufacturer) on pharmaceutical regulation. Governments may restrict prices directly (price caps) or limit third‐party payer reimbursement for the drug (reimbursement limits). I...

We analyze vertical integration incentives in a bilaterally duopolistic industry with bargaining in the input market. Vertical integration incentives are a combination of horizontal integration incentives upstream and downstream and depend on the strength of substitutability and complementarity...

Quasi‐hyperbolic discounted preferences imply that consumers overemphasize immediate current rewards and overlook future ones (they have a “bias for the present”). Within this context the literature has emphasized that the misalignment between immediate and future rewards can be rectified...

This paper examines the relationship between average income of export destinations and the skill premium using data of Chinese manufacturing industries from 1995 to 2008. To do so, we construct weighted average GDP per capita across destinations employing within‐industry export share to each...

Monopsony power by firms and social preferences by consumers are well established. We analyze how wages and employment change in a monopsony if workers compare their income with that of a reference group. We show that the undistorted, competitive outcome may no longer constitute the benchmark...

This paper analyzes the effects of credit frictions in a trade model where heterogeneous firms select both into exporting and into two types of external finance. While small producers face stronger credit frictions and rely on bank finance, large firms have access to cheaper bond finance. The...