Quality, Distance and Trade: a Strategic Approach

This paper contributes to the vast and growing literature on trade and quality by providing a parsimonious explanation of the observed increase in unit values (and thus quality) of shipped goods with the distance of the country of destination. This mechanism is based on the influence of distance on firms’ strategic behavior when the quality level of goods is a choice variable for firms, and complements the ones already proposed in the literature. Our approach differs from the extant literature in that it does not rely on technology or preference/income differentials to identify the determinants and drivers of trade flows. Moreover, it allows to clearly disentangle between the price setting and quality choice of firms. We find that distance has an unambiguously positive effect on the average quality of traded goods, as well as a negative one on the likelihood of “trade zeros”. Our results suit the acquired empirical evidence on distance and quality and contribute, therefore, to the research on the determinants of trade performances of firms and countries. Also, our model suggests some useful insights on the relation between distance and free-on-board prices.

Constraints on the Merger Models of Elliptical Galaxies from their Globular Cluster Systems

The discovery of proto-globular cluster candidates in many current-day mergers allows us to better understand the possible effects of a merger event on the globular cluster system of a galaxy, and to foresee the properties of the end-product. By comparing these expectations to the properties of globular cluster systems of today's elliptical galaxies we can constrain merger models. The observational data indicate that i) every gaseous merger induces the formation of new star clusters, ii) the number of new clusters formed in such a merger increases with the gas content of the progenitor galaxies. Low-luminosity (about M_V>-21), disky ellipticals are generally thought to be the result of a gaseous merger. As such, new globular clusters are expected to form but have not been detected to date. We investigate various reasons for the non-detection of sub-populations in low-luminosity ellipticals, i.e. absence of an old population, absence of a new population, destruction of one of the populations, and finally, an age-metallicity conspiracy that allows old and new globular clusters to appear indistinguishable at the present epoch. All of these possibilities lead us to a similar conclusion, namely that low-luminosity ellipticals did not form recently (z<1) in a gas-rich merger, and might not have formed in a major merger of stellar systems at all. High-luminosity ellipticals do reveal globular cluster sub-populations. However, it is difficult to account for the two populations in terms of mergers alone, and in particular, we can rule out scenarios in which the second sub-population is the product of a recent, gas-poor merger.Comment: 11 pages (MNRAS style, two columns, including 2 figures, mn.sty included), accepted for publication in the MNRAS, also available at http://www.ucolick.org/~mkissle

A Schumpeterian Growth Model with Heterogenous Firms

A common assumption in the Schumpeterian growth literature is that the innovation size is constant and identical across industries. This is in contrast with the empirical evidence which shows that: (i) the innovation size is far from being identical across industries; and (ii) the size distribution of profit returns from innovation is highly skewed toward the low value side, with a long tail on the high value side. In the present paper, we develop a Schumpeterian growth model that is consistent with this evidence. In particular, we assume that when a firm innovates, the size of its quality improvement is the result of a random draw from a Pareto distribution. This enables us to extend the class of quality-ladder growth models to encompass firm heterogeneity. We study the policy implications of this new set-up numerically and find that it is optimal to heavily subsidize R&D for plausible parameter values. Although it is optimal to tax R&D for some parameter values, this case only occurs when the steady-state rate of economic growth is very low.Schumpeterian Growth, R&D, optimal policy

On the formation of dwarf galaxies and stellar halos

Using analytic arguments and a suite of very high resolution (10^3 Msun per particle) cosmological hydro-dynamical simulations, we argue that high redshift, z ~ 10, M ~ 10^8 Msun halos, form the smallest `baryonic building block' (BBB) for galaxy formation. These halos are just massive enough to efficiently form stars through atomic line cooling and to hold onto their gas in the presence of supernovae winds and reionisation. These combined effects, in particular that of the supernovae feedback, create a sharp transition: over the mass range 3-10x10^7 Msun, the BBBs drop two orders ofmagnitude in stellar mass. Below ~2x10^7 Msun, galaxies will be dark with almost no stars and no gas. Above this scale is the smallest unit of galaxy formation: the BBB. A small fraction (~100) of these gas rich BBBs fall in to a galaxy the size of the Milky Way. Ten percent of these survive to become the observed LG dwarf galaxies at the present epoch. Those in-falling halos on benign orbits which keep them far away from the Milky Way or Andromeda manage to retain their gas and slowly form stars - these become the smallest dwarf irregular galax ies; those on more severe orbits lose their gas faster than they can form stars and become the dwarf spheroidals. The remaining 90% of the BBBs will be accreted. We show that this gives a metallicity and total stellar mass consistent with the Milky Way old stellar halo (abridged).Comment: 15 pages, 7 figures, one figure added to match accepted version. Some typos fixed. MNRAS in pres

The Elliptical Galaxy formerly known as the Local Group: Merging the Globular Cluster Systems

Prompted by a new catalogue of M31 globular clusters, we have collected together individual metallicity values for globular clusters in the Local Group. Although we briefly describe the globular cluster systems of the individual Local Group galaxies, the main thrust of our paper is to examine the collective properties. In this way we are simulating the dissipationless merger of the Local Group, into presumably an elliptical galaxy. Such a merger is dominated by the Milky Way and M31, which appear to be fairly typical examples of globular cluster systems of spiral galaxies. The Local Group `Elliptical' has about 700 +/- 125 globular clusters, with a luminosity function resembling the `universal' one. The metallicity distribution has peaks at [Fe/H] ~ -1.55 and -0.64 with a metal-poor to metal-rich ratio of 2.5:1. The specific frequency of the Local Group Elliptical is initially about 1 but rises to about 3, when the young stellar populations fade and the galaxy resembles an old elliptical. The metallicity distribution and stellar population corrected specific frequency are similar to that of some known early type galaxies. Based on our results, we briefly speculate on the origin of globular cluster systems in galaxies.Comment: 22 pages, Latex, 4 figures, 5 tables, submitted to A &