Department of Economics

We examine the price and variety of a sample of consumer goods at the barcode level in cities within China. Unlike the position in the United States, in China the prices of goods tend to be lower in larger cities. We explain that difference between the countries by the more uneven spatial distribution of manufacturers' sales and retailers in China, and we confirm the pro-competitive effect of city size on reducing markups there. In both countries, there is a greater variety of goods in larger cities, but that effect is more pronounced in China. Combining the lower prices and greater variety, the price indexes in China for the goods we study fall with city size by around seven times more than in the United States.

We ask whether mortality from historical pandemics has any predictive content for mortality in the Covid-19 pandemic. We find strong persistence in public health performance. Places that performed worse in terms of mortality in the 1918 influenza pandemic also have higher Covid-19 mortality today. This is true across countries as well as across a sample of large US cities. Experience with SARS in 2003 is associated with slightly lower mortality today. We discuss some socio-political factors that may account for persistence including distrust of expert advice, lack of cooperation, over-confidence, and health care supply shortages. Multi-generational effects of past pandemics may also matter.

Quantitative results from a large class of structural gravity models of international trade depend critically on the elasticity of trade with respect to trade frictions. We develop a new simulated method of moments estimator to estimate this elasticity from disaggregate price and trade-flow data and we use it within Eaton and Kortum's (2002) Ricardian model. We apply our estimator to disaggregate price and trade-flow data for 123 countries in the year 2004. Our method yields a trade elasticity of roughly four, nearly fifty percent lower than Eaton and Kortum's (2002) approach. This difference doubles the welfare gains from international trade.