This paper develops and estimates a model of the U.S. automobile industry. On the demand side, a discrete choice model is adopted, which is estimated using micro data from the Consumer Expenditure Survey. The estimation results are used in conjunction with population weights to derive aggregate demand. On the supply side, the automobile industry is modeled as an oligopoly with product differentiation. Equilibrium is characterized by the first-order conditions of the profit-maximizing firms. The estimation results are used in counterfactual simulations to investigate two trade policy issues: the effects of the voluntary export restraint, and exchange rate pass-through.

This paper documents the variation in dealer discounts for new cars using transactions price data from the Consumer Expenditure Survey. Consumer-specific characteristics fail to explain dealer discounts, whereas model, market-specific, and purchase transaction variables (e.g., first-time purchase, trade-in, and financing through dealer) do explain them. The results contradict earlier findings of race and gender discrimination based on a controlled experiment. This contradiction is reconciled by examining the higher moments of the empirical discount distribution; while mean and median markups do not vary by race and gender, minority purchases are characterized by higher dispersion. This may rationalize the disparate treatment of minorities by dealers documented in the controlled experiment.

This paper documents the variation in dealer discounts for new cars using transactions price data from the Consumer Expenditure Survey. Consumer-specific characteristics fail to explain dealer discounts, whereas model, market-specific, and purchase transaction variables (e.g., first-time purchase, trade-in, and financing through dealer) do explain them. The results contradict earlier findings of race and gender discrimination based on a controlled experiment. This contradiction is reconciled by examining the higher moments of the empirical discount distribution; while mean and median markups do not vary by race and gender, minority purchases are characterized by higher dispersion. This may rationalize the disparate treatment of minorities by dealers documented in the controlled experiment.

The authors discuss recent empirical research on how globalization has affected income inequality in developing countries. They begin with a discussion of conceptual issues regarding the measurement of globalization and inequality. Next, they present empirical evidence on the evolution of globalization and inequality in several developing countries during the 1980s and 1990s. The authors then examine the channels through which globalization may have affected inequality, discussing theory and evidence in parallel. They conclude with directions for future research.

A Structural Approach to Explaining Incomplete Exchange-Rate Pass-Through and Pricing-to-Market by Pinelopi Koujianou Goldberg and Rebecca Hellerstein. Published in volume 98, issue 2, pages 423-29 of American Economic Review, May 2008

The Grossman-Helpman "Protection for Sale" model, concerning the political economy of trade protection, yields clear predictions for the cross-sectional structure of import barriers. Our objective is to check whether the predictions of the Grossman-Helpman model are consistent with the data and, if the model finds support, to estimate its key structural parameters. We find that the pattern of protection in the United States in 1983 is broadly consistent with the predictions of the model. A surprising finding is that the weight of welfare in the government's objective function is many times larger than the weight of contributions.

Under the Agreement on Trade-Related Intellectual Property Rights, the World Trade Organization members are required to enforce product patents for pharmaceuticals. In this paper we empirically investigate the welfare effects of this requirement on developing countries using data for the fluoroquinolones subsegment of the systemic anti-bacterials segment of the Indian pharmaceuticals market. Our results suggest that concerns about the potential adverse welfare effects of TRIPS may have some basis. We estimate that the withdrawal of all domestic products in this subsegment is associated with substantial welfare losses to the Indian economy, even in the presence of price regulation. The overwhelming portion of this welfare loss derives from the loss of consumer welfare.

We examine the effects of international trade in the presence of a set of domestic distortions giving rise to informality, a prevalent phenomenon in developing countries. In our quantitative model, the informal sector arises from burdensome taxes and regulations that are imperfectly enforced by the government. In equilibrium, smaller, less productive firms face fewer distortions than larger, more productive ones, potentially leading to substantial misallocation. We show that in settings with a large informal sector, the gains from trade are significantly amplified, as reductions in trade barriers imply a reallocation of resources from initially less distorted to more distorted firms. We confirm findings from earlier reduced‐form studies that the informal sector mitigates the impact of negative labor demand shocks on unemployment. Nonetheless, the informal sector can exacerbate the adverse real income effects of economic downturns, amplifying misallocation. Last, our research sheds light on the relationship between trade openness and cross‐firm wage inequality.

We develop a framework for quantifying barriers to labor force participation (LFP) and entrepreneurship faced by women in India. We find substantial barriers to LFP, and higher costs of expanding businesses through hiring workers for women entrepreneurs. However, there is one area where female entrepreneurs have an advantage: the hiring of female workers. We show that this is not driven by the sectoral composition of female employment. Consistent with this pattern, policies promoting female entrepreneurship can significantly increase female LFP even without explicitly targeting female LFP. Counterfactual simulations indicate that removing all excess barriers faced by women entrepreneurs would substantially increase the fraction of female‐owned firms, female LFP, earnings, and generate substantial gains for the economy. These gains are due to higher LFP, higher real wages and profits, and reallocation: low productivity male‐owned firms previously sheltered from female competition are replaced by higher productivity female‐owned firms previously excluded from the economy.