We propose a theory of `regulatory endogenous sunk costs’ (RESC), in which a captured regulator raises minimum quality standards when market size increases in order to protect incumbent rms. Our RESC theory’s predictions that market size is unrelated to industry concentration and positively related to product quality are observationally equivalent to those of Sutton’s theory […]

We find a curious negative casual relationship between foreign direct investment (FDI) and total factor productivity growth (TFPG) across the world for the period 1996-2009. The relationship is robust to specifications in which we instrument for FDI using lagged values and geography variables as well as when we control for country and year fixed effects, […]

Retail chains and imports of consumer goods from developing countries have grown sharply over the past 25 years. Wal-Mart’s sales, which currently account for 15% of U.S. imports of consumer goods from China, grew 90-fold over this period, while U.S. imports from China increased 30-fold. We relate these trends using a model in which scale […]