Job market paper:

"Price Discrimination in International Trade: Empirical Evidence and Theory" (Job Market paper) [Online Appendix]

Abstract: This paper investigates empirically and theoretically second-degree price discrimination in business-to-business transactions. I use highly detailed transaction-level Colombian imports data to document the presence of quantity discounts. To rationalize this fact, I develop a tractable theoretical framework that embeds nonlinear pricing (second-degree price discrimination) into a standard international trade model and characterize optimal policies. I show that welfare losses from second-degree price discrimination can be quite substantial. Furthermore, optimal tariffs are higher when firms use non-linear prices as compared to standard models. Finally, if the policymaker sets tariffs that are optimal under linear pricing, but firms use second-degree price discrimination, this will lead to significant welfare losses.

Papers:

"The Intensive Margin in Trade" (with Ana Fernandes, Pete Klenow, Martha Denisse Pierola and Andrés Rodríguez-Clare), May 2017 (preliminary draft).

Abstract: The Melitz model highlights the importance of the extensive margin (the number of firms exporting) for trade flows. Using the World Bank’s Exporter Dynamics Database featuring firm-level exports from 50 countries, we find that around 50% of variation in exports does occur on the extensive margin — a quantitative victory for the Melitz framework. The remaining 50% on the intensive margin (exports per exporting firm) contradicts a special case of Melitz with Pareto-distributed firm productivity, which has become a tractable benchmark. This benchmark model predicts that, conditional on the fixed costs of exporting, all variation in exports across trading partners will occur on the extensive margin. Combining Melitz with lognormally-distributed firm productivity and firm-destination fixed trade costs can explain the intensive margin seen in the EDD data. In the EDD, the importance of the intensive margin rises steadily when going from the smallest to largest exporting firms across source countries, as is also predicted by the Melitz model with lognormally-distributed productivity.