This project is initially conceived as a primarily theoretical one. The highly influential New Economic Geography generally assumes homogeneous firms in the framework of the Dixit-Stiglitz model, in contrast to modern models of international trade which rely upon assumptions of firm-heterogeneity to help explain trade. The project attempts to combine the two approaches in an endeavour to enrich the explanatory power of NEG models. Toshihiro Okubo is responsible for the work.
This project is being undertaken by the Manchester Regional Economics Centre (MREC).