This paper sets up a two‐country model of offshoring with monopolistically competitive product and monopsonistically competitive labor markets. In our model, an incentive for offshoring exists even between symmetric countries, because shifting part of the production abroad reduces local labor...

To test the localized tastes hypothesis, we use historical dialect similarity as an instrument to predict the persistent component of regional taste differences. Analyzing wholesale markets for fruits and vegetables in Japan, we find that predicted taste differences have a strong, statistically...