When trade is costly within countries, international trade leads to concentration of economic activity in locations with good access to foreign markets. Costly trade within countries also makes it hard for remote locations to gain from international trade. We investigate the role of these forces...

Most international commerce is carried out by multinational firms, which use their foreign affiliates for the majority of their foreign sales. In this paper, I examine the determinants of multinational firms' location and production decisions and the welfare implications of multinational...