Trade, Location and Multiproduct Firms

27 Pages Posted: 19 Feb 2019

See all articles by Rikard Forslid

Rikard Forslid

Stockholm University; Centre for Economic Policy Research (CEPR)

Toshihiro Okubo

Keio University

Date Written: February 2019

Abstract

In this paper we study how trade liberalization affects the location and the product scope of firms. We find that the largest and most productive multiproduct firms concentrate to the larger market as a result of trade liberalization. In the presence of relocation costs, we also find that these firms will expand their product range in the larger market while firms in the smaller market will contract their product scope. These effects are magnified with firm-level productivity. The findings are consistent with Japanese manufacturing firm data.

Keywords: firm location, Heterogeneous Firms, multi-product firms, trade liberalization

JEL Classification: F12, F15

Suggested Citation

Forslid, Rikard and Okubo, Toshihiro, Trade, Location and Multiproduct Firms (February 2019). CEPR Discussion Paper No. DP13528. Available at SSRN: https://ssrn.com/abstract=3336786

Rikard Forslid (Contact Author)

Stockholm University ( email )

Universitetsvägen 10 A
House A, floor 4 and 7
Frescati, Stockholm
Sweden
+46 8 16 3096 (Phone)
+46 8 15 9482 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Toshihiro Okubo

Keio University ( email )

2-15-45 Mita
Minato-ku
Tokyo, 108-8345
Japan

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