With China's 2001 WTO accession, trade costs between the US and China fell sharply, but the transport costs of Chinese imports within the US remained sizable. We argue that domestic transport costs shield local labor markets from globalization. Using a shift-share design for industry-level...

In contrast to empirical evidence, recent theories of cross-border mergers and acquisitions (M&As) assume perfect knowledge transfers – from high to low productivity firms – between acquirer and target. Using the Melitz (2003) model of heterogeneous firms, we develop a matching model of...