We construct a simple two-country model that enables us to examine the interactions between trade in goods and international capital movement under financial imperfection. We show that they are complements in the sense that trade in goods facilitates capital outflow from the South, which is...

We consider trade policies intended to affect the production of a foreign monopolist that generates negative externalities. We derive the optimal tariff and optimal import quota and examine which policy measure should be used to maximize domestic welfare. We find that if the domestic government...

We propose a decomposition of social welfare when consumers' preferences are described by quasi-linear utility functions. In our decomposition, social welfare is expressed as the sum of consumers' gross utilities and trade surplus of non-numeraire goods, whose consumption enters utility...

We propose a theory that explains why international trade can widen a wage gap between top income earners and others and cause job polarization. In the basic model, we consider two symmetric countries in which individuals with different abilities work either as knowledge workers, who develop...