Many trade models of monopolistic competition identify cost efficiency as the main determinant of firm performance in export markets. To date, the analysis of demand factors has received much less attention. We propose a new model where consumer preferences are asymmetric across varieties and...

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...

I find evidence that the geographic expansion of firm exports occurs slowly over time and that a large share of export growth is due to incumbent exporters entering new destinations. New exporters enter large countries and destinations with characteristics similar to their domestic market. Less...

We present a general equilibrium model of monopolistic competition featuring pro-competitive effects and a competitive limit, and investigate the impact of trade on welfare and efficiency. Contrary to the constant elasticity case, in which all gains from trade are due to product diversity, our...

Corporate organization varies within countries and between countries. We develop a theory which explains the variation in levels of decentralization across firms and links it to the trade environment that firms face. We introduce firms with internal hierarchies in a Melitz and Ottaviano (2008)...

We develop a theory of a firm in an incomplete contracts environment which decides on the complexity, the organization, and the global scale of its production process. Specifically, the firm decides i) how many intermediate inputs are simultaneously combined to a final product, ii) if the...

We analyze a firm that produces a final good from multiple intermediates, each of which can be sourced domestically or from a low-wage country. Offshoring an intermediate is only profitable when it has matured sufficiently and the savings in production cost outweigh the underinvestment due to...

Many experts have identified globalization as the new way in which firms organize their activities and the emergence of talent as the new stakeholder in the firm. This paper examines the role of trade integration in the changing nature of the corporation. International trade leads to a ‘war...

This paper explores the impact of input trade liberalization on imported input and exported product prices. Using Chinese transaction data for 2000–2006, we capture causal effects between exogenous input tariff reductions and within firm changes in HS6-traded product prices. For...

We use 6-digit bilateral trade data to document the effect of WTO/GATT membership on the extensive and intensive product margins of trade. We construct gravity equations for the two product margins motivated by Chaney (2008). The empirical results show that standard gravity variables provide...