Keith Head

Chapter 2 uses the universe of trademark registrations in the United States to better capture gains from trade. Specifically, trademarks help overcome one major shortcoming: the inability to disentangle production from the design origin of new goods when relying on trade data. I show that distinguishing between the country of design and production is crucial, since traditional trade data overstates variety contributions from manufacturing hubs like China while understating the role of high-GDP countries as designers. Moreover, I quantify the variety gains from trade, obtaining 2-3 times larger variety gains for the years 1995-2014 compared to using sectoral trade flows and country-of-origin pairs. Chapter 3 disentangles two channels through which import competition from China affects the introduction of new American varieties. I use trademarks and detailed Chinese customs data to analyze the origins of US imports from China. I find that only 40% of them originate from Chinese-owned firms located in China, while the rest originate from multinational enterprises operating in China. I show that imports from Chinese-owned firms located in China reduce the introduction of new American varieties. In contrast, imports from multinational enterprises located in China increase the introduction of new American varieties for US buyers. Chapter 4, a project co-authored with Pinelopi Goldberg, Rèka Juhàsz, Nathan Lane, and Jeff Thurk, examines industrial policies in the semiconductor industry, a critical driver of economic growth and innovation. Using historical analysis, natural language processing, and a model-based approach, we document global industrial policies, explore their rationale, and evaluate their cross-border impacts. Our findings show that subsidies have been vital to the industry's growth, with technology transfers across countries playing a crucial role. Preliminary results reveal modest learning-by-doing effects, estimated at 3%, which is about 15% of the magnitude estimated by Irwin and Klenow (1994). However, we find significant cross-border effects, meaning that firms benefit from chip production in other countries, for instance, through technology transfers.

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This dissertation contains three studies. Chapter 2 studies the effect of product quality on foreign entry using data on U.S. movie exports and direct and revealed measures of movie quality. In the model, fixed costs of entry mean only the more appealing movies will find it profitable to enter each country. Empirically, a one-standard-deviation increase in quality increases the probability of entry by 25-50%. Movies in culturally-laden genres are less likely to enter foreign markets and their probability of entry is more sensitive to quality. I exploit differences in the propensity to import different genre types to estimate a measure of cultural distance between countries. The cultural distance measure enters a gravity equation of merchandise trade significantly. Chapter 3 investigates the international diffusion of a new product. Products traditionally enter foreign markets sequentially. This paper proposes that part of the explanation is that firms want to learn about their products’ appeal before incurring the fixed costs of entry. Each successive release serves to update the firm’s expectations for future performance---and thus their decision to enter more markets. On a sample of U.S. movies, I find that a one-standard-deviation increase in the update, based on the previous round’s box-office "surprise", is associated with a 25% increase in the probability of entry to a typical potential destination in the current round. Chapter 4 investigates Canada's interprovincial and international trade in services. While modern technology has allowed for long-distance service provision, regulatory non-tariff barriers may constitute substantial hurdles for further trade liberalization. This chapter describes three exercises contributing to the analysis of Canadian service trade. Using a theoretically-motivated framework, I estimate provincial and national border effects, and track the effect over time that distance has had on international trade.

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This dissertation comprises three essays, each of which studies a business phenomenon in the context of vertical supply chains. The first essay studies the equity stakes that downstream producers hold in their upstream input suppliers. It applies and extends a property-rights model to make predictions concerning the size of such equity stakes and tests three main hypotheses using firm-level data from the Japanese auto parts industry. The second essay studies the impact of multinational retailers on China's exports. As the multinational retailers enter China, they may increase Chinese exports through linkages with distant markets where they have operations. Meanwhile, the presence of multinational retailers may stimulate productivity growth among local Chinese suppliers. Chinese city-level exports data are utilized to test and distinguish these two mechanisms. The third essay synthesizes, extends and illustrates the theory of exclusionary contracts. Two new channels though which exclusionary contracts in vertical supply chains could be anti-competitive are proposed. A recent antitrust case illustrates all incentives---the two established channels and the two new ones.

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