Heterogeneous Firms and Trade
66 Pages Posted: 1 Feb 2013
There are 2 versions of this paper
Heterogeneous Firms and Trade
Date Written: January 2013
Abstract
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.
Keywords: firm heterogeneity, international trade, productivity
JEL Classification: F10, F12, F14
Suggested Citation: Suggested Citation