Felix Tintelnot's paper offers a framework to examine multinational firms' location and production decisions and the welfare effects of such decisions. The general equilibrium analysis presented in the paper reveals that multinational firms play an instrumental role in the transmission of technology improvements to foreign countries. Location decisions of multinationals can therefore have important welfare effects on countries hosting affiliates and on third countries. In the judgment of the Academic Selection Panel, Tintelnot's paper contributes significantly to understanding the cost structure of multinational enterprises and thus towards evaluating the economic effects of trade and investment choices made by some of the most central players in the global economy.
The Academic Selection Panel also decided to award an honourable mention to Benjamin Faber of the University of California Berkeley for his work entitled Trade Liberalization, the Price of Quality, and Inequality: Evidence from Mexican Store Prices. This paper considers a novel distributional channel of developing country trade liberalization that operates through differences in cost of living inflation between rich and poor households. Using a micro-level dataset, Faber provides evidence that cheaper access to foreign inputs reduces the relative price of higher quality products in the importing country, thus making richer households relatively better off. According to the Academic Selection Panel, the paper offers interesting novel contributions to trade theory and provides convincing empirical evidence based on an impressive dataset.
Felix Tintelnot is a German national. He studied economics at the Free University Berlin (Germany) before obtaining a Ph.D. in Economics from Pennsylvania State University (United States). He is currently an IES Fellow at Princeton University and will join the University of Chicago as assistant professor in 2014.
Benjamin Faber is a German national who received his Ph.D. in economics from the London School of Economics (UK) in 2013 after visiting the University of California, Los Angeles and the MIT during his graduate studies. He is currently an Assistant Professor in the Economics Department at the University of California Berkeley.
The first edition of the WTO Essay award was launched in April 2009.
The Academic Selection Panel for 2013 comprised Dr. Avinash Dixit (Emeritus Professor of Economics, Princeton University), Dr. Patrick Low (Director, Economic Research and Statistics Division, WTO), Dr. Robert Staiger (Professor of Economics, University of Wisconsin) and Dr. Alberto Trejos (Professor of Economics, INCAE Business School). Dr. Marion Jansen (Counsellor, Economic Research and Statistics Division, WTO) coordinated the selection process.