Firm heterogeneity, country-level asymmetry and the structure of the gains from trade.

Summary The main purpose of this dissertation is to examine three issues that have received little attention in the existing theoretical work on international trade. Thus, this dissertation has three objectives. The first is to study the welfare effects of liberalizing standards between asymmetric countries. The second is to examine theoretically and empirically the income effect on trade margins and their degree of sensitivity to trade costs. The third objective is to focus on the firm-specific aspect of the price elasticity of demand beyond the CES and to examine its role in determining the magnitude and structure of trade gains. To achieve this goal, I incorporate alternative assumptions into the canonical Melitz-Chaney model of international trade with heterogeneous firms (Melitz, 2003.