Productivity and Firm Selection: Quantifying the 'New' Gains from Trade

56 Pages Posted: 10 Oct 2011

See all articles by Gregory Corcos

Gregory Corcos

Norwegian School of Economics (NHH) - Department of Economics

Massimo Del Gatto

CRENOS - Centre for North South Economic Research; 'Gabriele d'Annunzio' University of Chieti-Pescara - Faculty of Economics

Giordiano Mion

University of Sussex

Gianmarco I.P. Ottaviano

Bocconi University - Department of Economics and Paolo Baffi Centre on Central Banking and Financial Regulation

Date Written: September 19, 2011

Abstract

We discuss how standard computable equilibrium models of trade policy can be enriched with selection effects. This is achieved by estimating and simulating a partial equilibrium model that accounts for a number of real world effects of trade liberalization: richer availability of product varieties; tougher competition and weaker market power of firms; better exploitation of economies of scale; and, of course, efficiency gains via firms selection. The model is estimated on EU data and then simulated in counter-factual scenarios. Gains from trade are much larger in the presence of selection effects with substantial variability across countries and sectors.

Suggested Citation

Corcos, Gregory and Del Gatto, Massimo and Mion, Giordiano and Ottaviano, Gianmarco I.P., Productivity and Firm Selection: Quantifying the 'New' Gains from Trade (September 19, 2011). NHH Dept. of Economics Discussion Paper No. 17/2011, Available at SSRN: https://ssrn.com/abstract=1941819 or http://dx.doi.org/10.2139/ssrn.1941819

Gregory Corcos (Contact Author)

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway

Massimo Del Gatto

CRENOS - Centre for North South Economic Research ( email )

Cagliari
Italy

'Gabriele d'Annunzio' University of Chieti-Pescara - Faculty of Economics ( email )

Faculty of Economics - Department of Economics
Viale Pindaro, 42
Pescara, 65127
Italy

Giordiano Mion

University of Sussex ( email )

Gianmarco I.P. Ottaviano

Bocconi University - Department of Economics and Paolo Baffi Centre on Central Banking and Financial Regulation ( email )

Via Gobbi 5
Milan, 20136
Italy

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