In this paper we extend the Melitz (2003) heterogeneous firm trade model to include differences in country sizes and production technologies. We begin by characterising a "superior" technology, in terms of both survival cutoffs and representative firm productivity, and then examine a (costly)...

We develop a two-country, two-sector model of trade where the only difference between the two countries is their distribution of human capital endowments. We show that even if the two countries have identical aggregate human capital endowments the pattern of trade depends on the properties of...