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Contents
1 Introduction and Basic Facts 4
I FirmsandtheDecisiontoExport 12
2 Intraindustry Heterogeneity with Fixed Costs of Exporting: Melitz
(2003) 13
3 Intraindustry Heterogeneity and Bertrand Competition: Bernard,
Eaton, Jensen, and Kortum (2003) 27
4 Firms and the Decision to Export: Empirics 38
4.1 Exporting and Plant-Level Performance . . . . . . . . . . . . . . . . . . 38
4.2 Evidence on Reallocation E
ffects: Pavcnik (2002) . . . . . . . . . . . . 405 The Relevance of Sunk Costs 47
II Firms and the Decision to Invest Abroad 52
6 Horizontal FDI: Brainard (1997) 53
7 Exports vs. FDI with Asymmetric Countries: Markusen and Venables
(2000) 63
8 Exports vs. FDI with Heterogenous Firms: Helpman, Melitz and
Yeaple (2003) 71
9 Vertical FDI: Theory and Evidence 82
1
III Intermission: The Boundaries of The Firm 96
10 The Theory of The Firm: Transaction-Cost Approaches 97
11 The Theory of The Firm: The Property-Rights Approach 107
12 The Theory of The Firm: Alternative Approaches 120
12.1 The Firm as an Incentive System: Holmstrom and Milgrom (1994) . . . 120
12.2 Formal andReal Authority: Aghion and Tirole (1997) . . . . . . . . . 126
12.3 Authority andHierarchies: Rosen (1982) . . . . . . . . . . . . . . . . . 129
IV Trade and Organizational Form 137
13 Early Transaction-Cost Approaches 138
13.1 Ethier (1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
13.2 Ethier andMarkusen (1996) . . . . . . . . . . . . . . . . . . . . . . . . 144
14 The Transaction-Cost Approach in Industry Equilibrium: McLaren
(2000) and Grossman and Helpman (2002) 148
14.1 Globalization and Vertical Structure: McLaren (2000) . . . . . . . . . . 148
14.2 Integration vs. Outsourcing in Industry Equilibrium: Grossman and
Helpman (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
15 The Property-Rights Approach in International Trade (I): Antràs
(2003a) 165
16 The Property-Rights Approach in International Trade (II): Antràs
(2003b) and Antràs and Helpman (2004) 182
16.1 Incomplete Contracts and the Product Cycle: Antràs (2003
b) . . . . . 18316.2 Global Sourcing with Heterogenous Firms: Antràs and Helpman (2004) 194
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