Abstract: This paper develops a structural model of trade between heterogeneous firms in which the network of firm-level input-output linkages is determined both dynamically and endogenously. Firms vary in the size of their customer and supplier bases, occupy heterogeneous positions in different supply chains, and adjust their sets of trade partners over time. Despite the rich heterogeneity and dynamics, the model remains computationally tractable. Using both cross-sectional and panel data on trading relationships between US firms, I estimate the model's key parameters via a simulated method of moments technique and assess its fit to the data. Simulations of the model are then used to study how the structure and dynamics of the production network matter for the propagation of firm-level supply and demand shocks and their translation into aggregate effects.
Title: “Incentives and Inefficiencies: Intellectual Property Rights and Technology Transfer” (email me for draft)
Abstract: In this paper, I study the interaction between intellectual property rights protection (IPR) by governments and technology transfer (TT) by multinational firms to their subsidiaries in various countries. I develop a two-country structural model of trade and foreign direct investment in which the incentives for IPR protection depend on the degree of TT and vice-versa, and show analytically how the model gives rise to two different kinds of inefficiencies. The first arises from non-cooperative behavior between governments in their choices of IPR policies, while the second arises from the profit-maximizing choices of TT by multinational firms. I then use the model to study the qualitative properties of these two inefficiencies, as well as to quantify their magnitudes. Doing so, I find that the IPR and TT inefficiencies are characterized by under-provision of IPR protection and TT respectively. Furthermore, the two inefficiencies are comparable in magnitude, amounting in combination to as much as 4% of the overall gains from openness to trade and FDI. The results of this paper therefore offer a rationale for international cooperation with regard to not only protection of intellectual property, but also with regard to the cross-border transfer of technology between firms.
Work in Progress
Title: "Trade and Innovation: The Role of Scale and Competition Effects"
with Daniel Trefler and Miaojie Yu