In this paper we develop a monopolistic competition model where firms exercise their market power across multiple products. Even with CES preferences, markups are endogenous. Firms choose their optimal product scope by balancing the net profits from a new variety against the costs of...

Recent research has demonstrated the importance of institutional quality at the country level for both the volume of trade and the ability to trade in differentiated goods that rely on contract enforcement. This paper takes advantage of cross-provincial variation in institutional quality in...

The latest World Bank estimates of real GDP per capita for China are significantly lower than previous ones. We review possible sources of this puzzle and conclude that it reflects a combination of factors, including substitution bias in consumption, reliance on urban prices which we estimate...

When materials offshoring is measured by estimating imported intermediate inputs, a common assumption used is that an industry's imports of each input, relative to its total demand, is the same as the economy-wide imports relative to total demand: this is the so-called "import comparability" or...

The monopolistic competition model in international trade offers three sources of gains from trade that do not arise in competitive models: expansion in product variety; a pro-competitive reduction in the markups charged by firms; and the self-selection of more efficient firms into exporting....

We describe the theory and practice of real GDP comparisons across countries and over time. Effective with version 8, the Penn World Table (PWT) will be taken over by the University of California, Davis and the University of Groningen, with continued input from Alan Heston at the University of...

The elasticity of substitution between goods from different countries---the Armington elasticity---is important for many questions in international economics, but its magnitude is subject to debate: the "macro" elasticity between home and import goods is often found to be smaller than the...

The unit values of internationally traded goods are heavily influenced by quality. We model this in an extended monopolistic competition framework where, in addition to choosing price, firms simultaneously choose quality. We allow countries to have non-homothetic demand for quality. The optimal...

This paper provides evidence on monopolistic competition models with endogenous technology by studying the effects of sectoral export variety on country productivity. The effects are estimated in a translog GDP function system based on data for 34 countries from 1982 to 1997. Country...

We demonstrate how to estimate a model of product demand and oligopoly pricing when products are multi-dimensionally differentiated. We provide an empirical counterpart to recent theoretical work on product differentiation. Using specifications informed by economic theory, we simultaneously...