This paper identifies a new source of gains from trade from asset heterogeneity among firms. Under financial frictions, a firm's capital rental is constrained by its own assets. We show that, with or without productivity heterogeneity, trade openness or liberalization will always force the least...

We prove that the normalization rule in Bond and Syropoulos (1996, Journal of International Economics 40, 411-437) that sets the world price of good 1 as the numéraire causes asymmetry in the Nash equilibrium. Such rule contradicts their symmetric assumption when one derives other blocs'...

A theoretical analysis of international trade and industrial policy, developing and using new models of trade with imperfect competition. Modeling of imperfect competition within international trade has been difficult until recent breakthroughs in this area, which have provided a more realistic...

China has been touted as a unique success story in development economics. The world financial crisis of 2007--2010 impacted China severely. Its GDP growth slowed, corporate debts piled up, equity markets became volatile, the renminbi weakened, and its forex reserves shrank in the face of capital...

This paper examines the various economic issues on offshoring (international outsourcing). It begins with a discussion of the factors that determine a firm's decision to offshore and illustrates, with simple models, the cost saving of offshoring certain stages of production and the advantages of...

The objective of this paper is to find the key factors that affect a firm's optimal transfer pricing policy. It examines two minimalist vertical models -- one consisting of a vertically integrated firm monopolizing an intermediate input for its own and rival's downstream division, and the other...

Optimal trade and industrial policies are examined in an export-rivalry and a home-market model with general cost heterogeneity among firms. The roles of the demand and cost structures in policy determination are systematically analyzed. It is shown that the equal-markup property holds in both...

The paper introduces the conjectural variations and bargaining approaches into a vertical model, wherein a foreign upstream firm supplies one input to two downstream firms that produce differentiated products for the export market. Various downstream firms' competition modes and upstream's...