Market Entry Costs, Underemployment and International Trade

Bougheas, Spiros; Riezman , Raymond G.

doi:10.2139/ssrn.1672665

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Market Entry Costs, Underemployment and International Trade

27 Pages Posted: 7 Sep 2010

See all articles by Spiros Bougheas

Spiros Bougheas

University of Nottingham - School of Economics

Aarhus University - Department of Economics and Business Economics; University of California, Santa Barbara (UCSB) - Department of Economics; University of Iowa - Henry B. Tippie College of Business - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); GEP; Aarhus University - School of Business and Social Sciences

There are 2 versions of this paper

Date Written: September 6, 2010

Abstract

We develop a small, open economy, two-sector model with heterogeneous agents and endogenous participation in a labor matching market. We analyze the implications of asymmetric market entry costs for the patterns of international trade and underemployment. Furthermore, we examine the welfare implications of trade liberalization and find that under certain conditions the patterns of trade are not optimal. We also examine the robustness of our results when we allow for complementarities in the production function and for alternative matching mechanisms.

Keywords: Entry Costs, Patterns of Trade, Underemployment

JEL Classification: F16

Suggested Citation: Suggested Citation

Bougheas, Spiros and Riezman, Raymond G., Market Entry Costs, Underemployment and International Trade (September 6, 2010). Available at SSRN: https://ssrn.com/abstract=1672665 or http://dx.doi.org/10.2139/ssrn.1672665