"Division of Labor and Endognenous Comparative Advantage: A Smith-Ricardian Model of International Trade " Review of International Economics, 2010 (forthcoming)
   

        This paper develops a Smith-Ricardian model that incorporates division of labor into the continuum-good Ricardian model of Dornbusch et al (1977). The trade-off between the efficiency gain and coordination cost in production determines the efficient level of division of labor. Consequently, the traditional comparative advantage becomes endogenous. The model is able to explain how the recent progress in information technology (IT) would affect the efficient level of division of labor and competitive margin.  In particular, we show that absolute advantage in division of labor and relative labor supply play a crucial role in determining the different effects of universal IT progress on a country's competitive margin in international trade.


"Trade, Market Size, and Industrial Structure: Revisiting the Home Market Effect", Canadian Journal of Economics, v38(1), February 2005, 
            
            This paper shows that the issues in the recent discussion over the “home market effects” are more complicated than previously thought. It is shown that, in general, market size matters for industrial structure even when the homogeneous and the differentiated goods both face transport costs. The home market effect for production structure can arise, disappear, or even reverse in sign.  The analysis shall change a common perception about “de-industrialisation of (small) economies and may also have important implications for the empirical research strategies in this area.

"Trade Liberalization and Strategic Outsourcing", Journal of International Economics, v63, July 2004, 419-436 (with Yongmin Chen and Jota Ishikawa)
            
            This paper develops a theory of strategic outsourcing. With trade liberalization, a domestic firm may choose to purchase a key intermediate good from a more efficient foreign producer, who also competes with the domestic firm in the final-good market. This could have a collusive effect on competition that results in higher prices for both the intermediate and final goods. In contrast to that in final goods, trade liberalization in intermediate goods may also increase the prices of both goods. Therefore, in the presence of strategic outsourcing, trade liberation can either lower or raise consumer prices, depending on the relative tariff reductions for intermediate and final goods.

“ Economies of scale and the volume of intra-industry trade ”, Economics Letters v74, 2001, pp127-132, (with Nicolas  Schmitt).

    Using a model of monopolistic competition with traded and non-traded goods (i.e. heterogeneous exporters), this paper establishes a positive link between scale economies, the volume of intra-industry trade and the share of trade in total production. These results are consistent with empirical findings.