Asymmetric Trade with Heterogeneous Firms

44 Pages Posted: 6 Aug 2020

See all articles by Jiahua CHE

Jiahua CHE

China Europe International Business School

Wen Zhou

University of Hong Kong

Date Written: July 17, 2020

Abstract

When countries are asymmetric, trade with heterogeneous firms can crowd in, rather than crowd out, less productive firms, and less productive firms almost always specialize in export. Whether and how these phenomena will arise depends on a country’s standing in the world. Our study helps reconcile empirical findings that are contradictory to the existing theoretical literature, and highlights the importance of country heterogeneity in understanding trade with firm heterogeneity.

Keywords: Firm heterogeneity, Asymmetric trade, Reverse-selection, Crowd-in, Country standing

JEL Classification: F10, F12, F14

Suggested Citation

CHE, Jiahua and Zhou, Wen, Asymmetric Trade with Heterogeneous Firms (July 17, 2020). Available at SSRN: https://ssrn.com/abstract=3653975 or http://dx.doi.org/10.2139/ssrn.3653975

Jiahua CHE (Contact Author)

China Europe International Business School ( email )

Shanghai-Hongfeng Road
Shanghai 201206
Shanghai 201206
China

HOME PAGE: http://https://www.ceibs.edu/cjiahua

Wen Zhou

University of Hong Kong ( email )

1225 KKL Building
Pokfulam Road
Hong Kong
China

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