Two alternative models have been proposed regarding the role of BMP signalling during lung branching morphogenesis. One model suggests that mesenchymal derived FGF10 induces Bmp4 expression by the distal bud epithelium to limit, in an autocrine manner, Fgf10-mediated bud outgrowth [45, 50] . The other model, based on the differential response of the distal epithelial buds to BMP4 in the presence or absence of mesenchyme, proposes that Bmp4 produced by the distal epithelium acts in an autocrine manner to limit proliferation of distal epithelial buds, and in a paracrine manner, on the adjacent mesenchyme, to induce production of a mesenchymal signal that enhances proliferation of distal epithelial buds [51] . Thus, according to the latter model the negative or positive effect of BMP signalling on branching is the outcome of a dynamic balance between negative autocrine and positive paracrine mechanism.