The consensus in the recent literature is that gains from international monetary cooperation are negligible, and so costs of a breakdown cooperation. However, when assessed conditionally on empirically-relevant dynamic developments economy, welfare cost moving away regimes explicit or implicit may rise to multiple times economic fluctuations. In economies with incomplete markets, incentives act...

We study the gains from trade in a model with oligopolistic competition, heterogeneous firms and innovation. Our key finding is that trade-induced increase market concentration can be an important source of trade. Foreign competition puts downward pressure on profitability which reduces equilibrium number firms, but increases their size. This rise welfare via two channels: increasing returns pr...