This paper discusses the impact of conformism on product quality, firm selection, and trade patterns. It shows that when consumers have a higher degree of conformism and/or their distribution of conformism becomes more concentrated, the equilibrium average demand falls while product quality...

This paper studies the e¤ects of consumer income heterogeneity on monopolistically competitive product markets and individual welfare in the context of non-homothetic preferences. When expenditure of richer individuals is less sensitive to price change compared to poorer ones, a mean-preserving...

We derive a simple necessary and sufficient condition on preferences for the market outcome to be socially optimal under monopolistic competition with input-output (IO) linkages. Preferences that satisfy this condition are typically non-CES and display pro-competitive effects, although they...

We show how trade and communication costs interact to shape the way firms organize their activities across space. We consider the following three organizational types: (i) integrated firms in which all activities are conducted at the same location, (ii) horizontal firms, which operate several...

Larger cities typically give rise to two effects working in opposite directions: tougher competition among firms and higher production costs. Using an urban model with substitutability of production factors and pro-competitive effects, we study how market outcome responds to city population...

We develop a two-factor, two-sector trade model of monopolistic competition with variable elasticity of substitution. Firms' profits and sizes may increase or decrease with market integration depending on the degree of asymmetry between countries. The country in which capital is relatively...

We study the role of: (i) initial differences in shares of immobile workers between countries which stand for the agglomeration forces, and (ii) positive trade costs in the traditional sector which are related to the dispersion forces, in shaping the spatial pattern of the developed and...