Working Papers

"Home-Bias Patterns and the Strategic Gains of Domestic Leaders: Theory and Evidence"

In this paper, I formalize and quantify a first-mover advantage for domestic firms that generates home-bias patterns. I extend firms' choices to include demand-enhancing investments and show that, relative to a benchmark where all firms invest simultaneously, there is an overinvestment by domestic firms. Thus, firms skew resources to their local markets and crowd out foreign firms. To analyze the mechanism theoretically, I develop a tractable framework that incorporates large firms making multiple choices and accounts for extensive-margin adjustments and firm heterogeneity. Unlike standard two-stage oligopolies with no entry, the result is independent of the type of competition (prices or quantities). For the empirics, I adapt the general model to a structural one and estimate it using a rich dataset at the firm-product level of all the Danish manufacturing industries. The results indicate that first-mover advantages are important in shaping the structure of the economy and as explanation of home-bias patterns, exhibing pronounced heterogeneity across industries and firms. 

"The Microeconomics of New Trade Models" (NEW VERSION!!!)

I provide a unified framework to analyze models of monopolistic competition with firm heterogeneity à la Melitz under standard demands and any productivity distribution. By using this methodology, I disentangle the effects of export opportunities and import competition. I show that while the former entails pro-competitive effects for domestic firms, contrary to what might be expected tougher import competition has no impact on either domestic firms' prices, quantities or their survival productivity cutoff; it only affects the mass of domestic incumbents. The results applied to the case of two big economies imply that a unilateral liberalization only entails tougher export conditions for the liberalizing country, thus explaining the Metzler paradox found under this framework. I also show that when firms know their productivity and enter following a productivity order, the disciplinary effects from import competition are restored.

Work in Progress

"Oligopolistic Competition and Trade: A Quantitative Framework in General Equilibrium" 
"Patterns of North-South Trade under Income Constraints: Theory and Evidence" (with David Lander)