We introduce incomplete outsourcing contracts in an otherwise standard model of MNEs based on the trade-off between proximity and concentration. This has both positive and normative implications. As to the former, incomplete outsourcing contracts can account for the observed emergence of FDIs in...

Climate change is a global problem that calls for, among other measures, global carbon taxation. As not all countries tax carbon, those with higher carbon taxes, such as the EU members, face the risk of "carbon leakage". The Carbon Border Adjustment Mechanism (CBAM) makes the carbon price of...

This essay provides an overview of the role of infrastructure on economic geography in the light of both theoretical and empirical findings. Two main lessons stand out. First, infrastructural improvements affect the geographical distribution of economic activities. Second, even when localized,...