Working Papers
Oligopoly and Oligopsony in International Trade. October, 2018 (with Vladimir Tyazhelnikov)
Large firms dominate final goods markets, in which they have oligopoly power, and also input markets, in which they have oligopsony power. Using data on market concentration, we find that both oligopoly and oligopsony power increase unit prices of export goods. We investigate the effects of international trade on the two sources of firms' market power and prices, in a theoretical model in which firms are oligopolists in the market for final goods and oligopsonists in the market for inputs. International integration in final goods markets reduces oligopoly power but it has the opposite effect on oligopsony power. Similarly, input market integration reduces oligopsony power, but it increases oligopoly power.
Flexibility and Productivity: Towards the Understanding of Firm Heterogeneity for Multi-product Exporters. October, 2018 (with Mingzhi Xu)
We study the heterogeneity of scope and sales for multi-product exporters. Guided by new firm-level evidence from custom transaction data from China, we build a general-equilibrium model featuring firm heterogeneity in productivity and in flexibility, namely the ability to introduce new varieties in a destination at low costs. We estimate our model finding suggestive evidence of a trade-off between productivity and flexibility: more productive firms are likely to be less flexible, as they pay higher fixed costs to introduce new varieties. The estimation highlights industry heterogeneity in the determinants and effects of firms' flexibility. Moreover, heterogeneity in flexibility accounts for 65 to 75% of the total variation in scope across firms and destinations, and 12 to 16% of the total variation in sales.
The Welfare Benefits of Raising your Standards. August, 2018 (with Ariel Weinberger)
Negotiations on modern trade agreements are increasingly focused on technical measures such as quality standards. We first examine the implications of quality standards on the reallocation of domestic sales. Guided by this evidence, we build a model of monopolistically competitive, heterogeneous firms, in which a quality standard forces low-quality firms to exit. Raising the quality standard can improve welfare if too many low-quality firms are present in the market allocation relative to the efficient allocation. We find that this is indeed the case when preferences are non-homothetic, which provides a new rationale for technical measures that has not been accounted for in the previous literature. A reduction in trade costs reduces the optimal standard in a cooperative equilibrium across countries. We estimate the restrictiveness of standards across Chilean industries and find that in several instances the imposed standard is too restrictive relative to an upper bound for the standard predicted by the model. However, there is suggestive evidence that a rise in openness has reduced restrictiveness, which supports the efforts to improve agreements on technical measures along with traditional trade agreements.
Large Multiproduct Exporters Across Rich and Poor Countries: Theory and Evidence.
April, 2018 (under review)
Online Appendix
Large multiproduct exporters dominate trade flows and their scope decisions have new implications for the welfare gains from trade. Guided by new evidence from the Exporter Dynamics Database, I build a model in which income and cannibalization effects drive the scope decisions of large firms. I derive a new formula for the welfare gains from trade where the change in welfare depends on the change and on the ex-ante level of the domestic market share of the typical domestic firm. Ignoring income or cannibalization effects causes mismeasurement of the US welfare gains by 20%.
Large multiproduct exporters dominate trade flows and their scope decisions have new implications for the welfare gains from trade. Guided by new evidence from the Exporter Dynamics Database, I build a model in which income and cannibalization effects drive the scope decisions of large firms. I derive a new formula for the welfare gains from trade where the change in welfare depends on the change and on the ex-ante level of the domestic market share of the typical domestic firm. Ignoring income or cannibalization effects causes mismeasurement of the US welfare gains by 20%.
Has the Euro Shrunk the Band? Price Convergence in a Currency Union. January, 2018, revise and resubmit at Scandinavian Journal of Economics
Online Appendix
I study the effects of the European Monetary Union (EMU) on price convergence using monthly disaggregated price indices from 32 European countries from 1999 to 2016. I apply Heckscher's insight that transaction costs create bands of inaction in which price differences are not arbitraged away, and I estimate the bands of inaction using a threshold autoregressive model. My findings suggest that the EMU reduces transaction costs: the bands of inaction between countries in the EMU are 17% lower than the average band. Time series evidence from the entry in the EMU of selected countries further confirms the result.
I study the effects of the European Monetary Union (EMU) on price convergence using monthly disaggregated price indices from 32 European countries from 1999 to 2016. I apply Heckscher's insight that transaction costs create bands of inaction in which price differences are not arbitraged away, and I estimate the bands of inaction using a threshold autoregressive model. My findings suggest that the EMU reduces transaction costs: the bands of inaction between countries in the EMU are 17% lower than the average band. Time series evidence from the entry in the EMU of selected countries further confirms the result.
Work in Progress
International Regulatory Protectionism (with Ariel Weinberger)
Multiproduct Firms and Consumer Niches: Theory and Evidence (with Mingzhi Xu)
Publications - Pre Ph.D.
Exchange Rate Devaluation and Reshuffling of Global Jobs (with F. Sdogati). Journal of Economic Integration, 2013; 28(2):241-268. Awarded the Dae-Yang Prize for best article in 2013.
Other work
Published on ISPI (Italian Institute For International Political Studies)
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