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Report
Home bias in trade: location or foreign-ness?
With "home bias," a consumer differentiates between domestic goods and imports and tends to purchase the domestic variety. A vast number of empirical studies in the international trade literature report the apparent prevalence of a large degree of home bias (the case of the "missing trade," the "border puzzle"). Many theoretical studies, in turn, assume its presence. Despite this wide usage, the origins of home bias remain cloudy. Do customs officials require extensive paper work, thus making imports prohibitively expensive? Is there some inherent distrust of a foreign product? ; This paper ...
Working Paper
Are antidumping duties for sale? case-level evidence on the Grossman-Helpman protection for sale model
As successive rounds of global trade liberalization have lowered broad industry-level tariffs, antidumping duties have emerged as a WTO-consistent means of protecting certain industries. Using the Grossman-Helpman (GH) "Protection for Sale" model, we examine the extent to which political contributions affect the outcomes of decisions in antidumping cases. We find that antidumping duty rates tend to be higher for politically-active petitioners. The relationship between the import penetration ratio and duties imposed depends on whether or not petitioners in a case are politically active. ...
Working Paper
Distance, time, and specialization
Time is money, and distance matters. We model the interaction of these truisms, and show the implications for global specialization and trade: products where timely delivery is important will be produced near the source of final demand, where wages will be higher as a result. In the model, timely delivery is important because it allows retailers to respond to fluctuating final demand without holding costly inventories, and timely delivery is only possible from nearby locations. Using a unique dataset that allows us to measure the retail demand for timely delivery, we show that the sources of ...
Report
Border effects and the availability of domestic products abroad
Borders have a sizable negative impact on trade flows. Given the vast number of individual goods potentially traded, this "border effect" could have two possible explanations: (1) less international than domestic trade in the goods that are actually traded between countries ("flow"), or (2) differences between the sets of goods traded internationally and domestically--that is, fewer goods are available as exports than are sold in the home market ("availability"). Most of the previous literature on border effects has ignored the possible role of this second factor, instead ...
Journal Article
Bilateralism, multilateralism, and trade rules
Since 2001, countries around the world have been working on crafting a new global pact to liberalize trade. Despite the difficulties of completing such a multilateral agreement, it remains a worthwhile goal for two reasons. First, a global pact offers cost and efficiency benefits that can?t be achieved under the kinds of agreements among smaller groups of countries that have proliferated in recent years. Second, a global agreement presents a unique opportunity to optimize the use of the world?s resources, thereby improving well-being around the world.