In this paper, we derive a new effect of trade liberalization on the quality of the environment. We show that in the presence of heterogeneous firms, the aggregate volume of emissions is influenced by a reallocation effect resulting from an increase in the relative size of more productive firms....

This paper sets up a two‐country model of offshoring with monopolistically competitive product and monopsonistically competitive labor markets. In our model, an incentive for offshoring exists even between symmetric countries, because shifting part of the production abroad reduces local labor...

This paper considers the links between trade liberalization and technology choice in the nonliberalizing country. Trade-liberalization-induced changes in relative product prices have direct effects on equilibrium relative factor returns. The consequent changes in relative input costs may also...