International Trade and Organizations.

• Position: Program and Working Group Meetings

NBER's Working Group on International Trade and Organizations met in Cambridge on April 26. Pol Antras, NBER and Harvard University, organized the meeting and chose these papers for discussion:

Arnaud Costinot, University of California, San Diego and NBER, "Heterogeneity and Trade"

Discussant: Oteg Itskhoki, Harvard University

Natalia Ramondo, University of Texas, and Andres Rodriguez-Clare, Pennsylvania State University and NBER, "The Gains from Openness:

Trade, Multinational Production, and Diffusion"

Discussant: Costas Arkolakis, Yale University and NBER

Paola Conconi and Patrick Legros, ECARES, Universite Libre de Bruxelles, and Andrew F. Newman, Boston University, "Trade Liberalization and Organizational Choice"

Discussant: Emanuel Ornelas, London School of Economics

Andrew B. Bernard, Dartmouth College and NBER; J. Bradford Jensen, Georgetown University and NBER; Stephen J. Redding, London School of Economics, and Peter K. Schott, Yale University and NBER, "Intra-Firm Trade and Product Contractibility"

Discussant: Nathan Nunn, Harvard University and NBER

Yongmin Chen, University of Colorado, Boulder; Ignatius Horstmann, University of Toronto; and James Markusen, University of Colorado, Boulder and NBER, "Physical Capital, Knowledge Capital and the Choice Between FDI and Outsourcing"

Discussant: Kalina Manova, Stanford University

Aggregate production functions are a standard feature of the trade theorist's toolbox. While this modeling device has generated some fundamental insights, it presents one obvious shortcoming: it necessarily ignores any effect that the distribution of factor endowments across agents may have on international trade flows. Costinot develops a general framework that can shed light on these effects and discusses several applications.

Ramondo and Rodriguez-Clare quantify the role played by trade, multinational production (MP), and diffusion of ideas in generating gains from "openness" They extend the Eaton and Kortum (2002) model of trade by introducing MP and diffusion of ideas. A key contribution is to model the simultaneous role of trade, MP, and diffusion, and explore some of the interactions among these different channels. Both trade and MP are substitutes with diffusion, but the relationship among trade and MP is more complex. Trade and MP are alternative ways to serve a foreign market, which makes them substitutes, but the authors also allow for complementarity by having MP rely on imports of intermediate...