Firm Heterogeneity and the Two Sources of Gains from Trade

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Show simple item record AGUR, Itai 2007-02-02T10:41:02Z 2007-02-02T10:41:02Z 2006
dc.identifier.issn 1725-6704
dc.description.abstract Recent empirical work identies two main channels through which consumers benefit from trade. Trade liberalization lowers prices, while it raises product variety. This paper develops the first model that connects both channels and interprets their interaction. It shows that heterogeneity in firm productivity is the source behind both. Upon liberalization efficient exporters enter, pushing out the least efficient domestic firms. Two countervailing forces emerge, both stylized facts. Liberalization leaves a more concentrated market. But exporters offer more variety than the firms that they replace. Remarkably, total variety unambiguously increases. Exploration of comparative statics leads to an intuitive explanation. en
dc.format.extent 211795 bytes
dc.format.mimetype application/pdf
dc.language.iso en en
dc.publisher European University Institute
dc.relation.ispartofseries EUI ECO en
dc.relation.ispartofseries 2006/38 en
dc.rights info:eu-repo/semantics/openAccess
dc.subject Trade en
dc.subject Firm selection en
dc.subject Product Variety en
dc.subject Heterogeneous firms en
dc.subject F12 en
dc.subject F15 en
dc.subject L11 en
dc.title Firm Heterogeneity and the Two Sources of Gains from Trade en
dc.type Working Paper en
dc.neeo.contributor AGUR|Itai|aut|
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