This paper develops a general equilibrium model of international trade in homogenous intermediate inputs. In the model, trade between countries is driven exclusively by uncertainty in the delivery of inputs. Because their managers are risk-averse, final good firms contract with multiple...

Two parameters are central to several modern quantitative models of bilateral international trade flows: the elasticity of substitution in consumption (σ) and the inverse index of heterogeneity of firms’ productivities (θ). However, structural parameter estimation applications using the...

In seminal studies, Feenstra (1994) and Broda and Weinstein (2006) develop an econometric method to quantify the welfare gains from trade associated with increases in product varieties. While it is the most widely respected structural approach, it relies on a contentious assumption: the...