Property Rights and the International Organization of Production

I survey the influence of Grossman and Hart’s (1986) seminal paper in the field of International Trade. I discuss the implementation of the theory in open-economy environments and its implications for the international organization of production and the structure of international trade flows. I also review empirical work suggestive of the empirical relevance of the propertyrights theory. Along the way, I develop novel theoretical results and also outline some of the key limitations of existing contributions. ∗This survey was prepared for the “Grossman and Hart at 25” conference held in Brussels on June 24-26, 2011. I am grateful to Lucia Antras, Davin Chor, Arnaud Costinot, Oliver Hart, and an anonymous referee for very helpful comments and to Elhanan Helpman for many conversations on this topic over the years. I am also grateful to Davin Chor, Federico D́ıez, Nathan Nunn, Heiwai Tang, and Dan Trefler for kindly sharing their data with me, and to Ruiqing Cao for excellent research assistance.