A Theory Of Trade Liberalization And Innovations With Heterogeneous Firms
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A Theory Of Trade Liberalization And Innovations With Heterogeneous Firms
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Author : Christian Rutzer
language : en
Publisher:
Release Date : 2014
A Theory Of Trade Liberalization And Innovations With Heterogeneous Firms written by Christian Rutzer and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
This paper extends the firm heterogeneity model of Melitz (2003) by introducing a new concept of endogenous investments in process R&D. The novelty is that if a firm invests more in R&D its expected innovation return hazard rate stochastically dominates the return of less R&D investments. Due to this property, entrants invest more in R&D in response to trade liberalization. As a result, the aggregate productivity is affected by a reallocation of resources to more productive firms and a simultaneous increase in firms' investments in innovations, which is consistent with empirical findings. At the same time the firms' increased R&D investments lead to a sector distribution with a higher right-tail compared to the distribution prior to trade liberalization. Hence, the model gives an explanation for the empirically found differences in the distribution tails among sectors with different trade openness levels. Another advantage of this paper's framework compared to other trade models with innovations is its foundation in and extension of Melitz (2003). It enables most of the heterogeneous firms trade models to be extended by endogenous firm-level R&D in an empirically relevant and analytically tractable way.
Comparative Advantage And Heterogeneous Firms
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Author : Andrew B. Bernard
language : en
Publisher:
Release Date : 2004
Comparative Advantage And Heterogeneous Firms written by Andrew B. Bernard and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2004 with Diversification in industry categories.
This paper presents a model of international trade that features heterogeneous firms, relative endowment differences across countries, and consumer taste for variety. The paper demonstrates that firm reactions to trade liberalization generate endogenous Ricardian productivity responses at the industry level that magnify countries' comparative advantage. Focusing on the wide range of firm-level reactions to falling trade costs, the model also shows that, as trade costs fall, firms in comparative advantage industries are more likely to export, that relative firm size and the relative number of firms increases more in comparative advantage industries and that job turnover is higher in comparative advantage industries than in comparative disadvantage industries.
Theories Of Heterogeneous Firms And Trade
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Author : Stephen Redding
language : en
Publisher:
Release Date : 2010
Theories Of Heterogeneous Firms And Trade written by Stephen Redding and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with Business enterprises categories.
Abstract: This paper reviews the recent theoretical literature on heterogeneous firms and trade, which emphasizes firm selection into international markets and reallocations of resources across firms. We discuss the empirical challenges that motivated this research and its relationship to traditional trade theories. We examine the implications of firm heterogeneity for comparative advantage, market size, aggregate trade, the welfare gains from trade, and the relationship between trade and income distribution. While a number of studies examine the endogenous response of firm productivity to trade liberalization, modeling internal firm organization and the origins of firm heterogeneity remain interesting areas of ongoing research
Heterogeneous Firms And Trade
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Author : Richard E. Baldwin
language : en
Publisher:
Release Date : 2005
Heterogeneous Firms And Trade written by Richard E. Baldwin and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with Commerce categories.
This paper sets out a basic heterogeneous-firms trade model that is closely akin to Melitz (2003). The positive and normative properties of the model are studied in a manner intended to highlight the core economic logic of the model. The paper also studies the impact of greater openness at the firm-level and aggregate level, focusing on changes in the number and type of firms, trade volumes and prices, and productivity effects. The normative effects of liberalisation are also studied and here the paper focuses on aggregate gains from trade, and income redistribution effects, showing inter alia that the model is marked by a Stolper-Samuelson like effect. A number of empirically testable hypotheses are also developed. These concern the impact of greater openness on the firm-level trade pattern, the variance of unit-prices, the stock market valuation of firms according to size, and the lobbying behaviour by size.
International Trade With Heterogeneous Firms
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Author : Alessandra Bonfiglioli
language : en
Publisher:
Release Date : 2021
International Trade With Heterogeneous Firms written by Alessandra Bonfiglioli and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021 with Business enterprises categories.
International trade is dominated by a small number of very large firms. Models of trade with heterogeneous firms have been developed to study the causes and consequences of this observation. The canonical model of trade with heterogeneous firms shows that trade leads to between-firm reallocations and selection: it shifts employment towards firms with the best attributes and forces marginal firms to exit. The model also illustrates the role of heterogeneity, and its various sources, in explaining the volume of trade and the firm-level margins of adjustment. Consistent with the model, earlier empirical studies have documented that exporting is a rare activity, that exporting firms are larger and more productive than other firms, and that trade liberalization reallocates market shares towards the best-performing firms in various countries. More recent studies using transaction-level data have unveiled additional salient features of trade flows. First, sales by foreign firms are very heterogeneous and highly concentrated. Second, both the extensive margin (number of exporting firms) and the intensive margin (average export per firm) are important in explaining the level of exports and its changes over time. More heterogeneity in sales across firms is associated with a higher volume of trade along both margins. Third, increased foreign competition reallocates market shares towards top firms and hence can increase concentration from any country of origin. Numerous extensions of the benchmark model have been proposed to study other important aspects, such as the relevance of multi-product and multinational firms and the extent to which heterogeneity is endogenous to firms' choices, but some open challenges still remain.
Trade Liberalization With Heterogeneous Firms
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Author : Richard E. Baldwin
language : en
Publisher:
Release Date : 2006
Trade Liberalization With Heterogeneous Firms written by Richard E. Baldwin and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Free trade categories.
A General Theory Of Trade And Competition
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Author : Shanker Singham
language : en
Publisher: Cameron May
Release Date : 2007
A General Theory Of Trade And Competition written by Shanker Singham and has been published by Cameron May this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with Business & Economics categories.
General Theory of Trade... is the first academic or practitioner text book to establish a general theory of trade and competition and attempts to bring these two disciplines back together. Shanker Singham demonstrates that there is indeed a powerful interface between these two areas and that by understanding this interface practitioners, be they in governments, companies or law and economics firms can succeed in trade negotiations as well as build up support for free trade principles in a time when they are being increasingly challenged. By noting that consumer welfare is enhanced where trade liberalization is accompanied by competitive markets and property rights protection, the author articulates an overall vision in which future policymakers can frame a different kind of trade debate.
Heterogeneous Firms And Trade
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Author : Marc J. Melitz
language : en
Publisher:
Release Date : 2012
Heterogeneous Firms And Trade written by Marc J. Melitz and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with Economics categories.
This paper reviews the new approach to international trade based on firm heterogeneity in differentiated product markets. This approach explains a variety of features exhibited in disaggregated trade data, including the higher productivity of exporters relative to non-exporters, within-industry reallocations of resources following trade liberalization, and patterns of trade participation across firms and destination markets. Accounting for these empirical patterns reveals new mechanisms through which the aggregate economy is affected by trade liberalization, including endogenous increases in average industry and firm productivity.
Skill Biased Heterogeneous Firms Trade Liberalization And The Skill Premium
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Author : James Harrigan
language : en
Publisher:
Release Date : 2011
Skill Biased Heterogeneous Firms Trade Liberalization And The Skill Premium written by James Harrigan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with Economics categories.
We propose a theory that rising globalization and rising wage inequality are related because trade liberalization raises the demand for highly competitive skill-intensive firms. In our model, only the lowest-cost firms participate in the global economy exactly along the lines of Melitz (2003). In addition to differing in their productivity, firms in our model differ in their skill intensity. We model skill-biased technology as a correlation between skill intensity and technological acumen, and we estimate this correlation to be large using firm-level data from Chile in 1995. A fall in trade costs leads to both greater trade volumes and an increase in the relative demand for skill, as the lowest-cost/most-skilled firms expand to serve the export market while less skill-intensive non-exporters retrench in the face of increased import competition. This mechanism works regardless of factor endowment differences, so we provide an explanation for why globalization and wage inequality move together in both skill-abundant and skill-scarce countries. In our model countries are net exporters of the services of their abundant factor, but there are no Stolper-Samuelson effects because import competition affects all domestic firms equally.
The New Political Economy Of Trade
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Author : Michael Plouffe
language : en
Publisher:
Release Date : 2013
The New Political Economy Of Trade written by Michael Plouffe and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
The increased availability and quality of micro-level datasets has led to a revolution in the study of the economics of international trade. In this project, I extend the insights gained from recent advances in trade theory to their political-economy implications. That is, the variations in producers' characteristics - especially productivity - that determine their economic behaviors also govern their policy positions and political behaviors in predictable ways. Highly productive firms are more likely to favor trade liberalization and participate actively in political processes, while low productivity firms are more likely to favor protection, and are less likely to engage in politics. I apply my theory to an original survey of Japanese manufacturers, a large cross section of publicly-held American firms, and two of the industries that battled over the Smoot-Hawley Tariff of 1930, finding support for my model.