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it improves aggregate productivity net of transport costs. We show that this condition is likely to be met by a reduction …
Persistent link: https://www.econbiz.de/10005703196
face a fall in output, mark-ups and profits, and the average productivity of survivors increases. These pro …
Persistent link: https://www.econbiz.de/10008497005
The robust empirical finding that exporting firms are systematically different from firms that merely serve domestic consumers has inspired the development of a new brand of trade theory, the theory of heterogeneous firms and trade. The establishment of a canonical model due to Melitz (2003) has...
Persistent link: https://www.econbiz.de/10009369421
The risk of default that business firms face is very significant and differs widely across countries. This paper explores the links between countries' business conditions and international trade embedment and the default risk at the country level from a theoretical point of view. Our main...
Persistent link: https://www.econbiz.de/10008854768
improve the business conditions in one country have negative productivity and welfare effects on the trading partner. Second …
Persistent link: https://www.econbiz.de/10008777139
An analytically solvable model of new economic geography is developed. Acquisition of skills is costly for workers but it allows them to earn wages that are larger than those of the unskilled. Moreover, skills acquisition can be subsidized by a regional government. For large transport costs,...
Persistent link: https://www.econbiz.de/10005762199
knowledge sector is bounded, as productivity increases, the economy moves from a "Solovian zone" where wages increase with … productivity, to a "Marxian" zone where the paradoxically decline with productivity. This is because as consumption of a given good … more unevenly distributed then productivity, technical progress always increases inequality. Redistribution from profits to …
Persistent link: https://www.econbiz.de/10005762377
The core-periphery model by Krugman (1991) has two 'dramatic' implications: catastrophic agglomeration and locational hysteresis. We study this seminal model with CES instead of Cobb-Douglas upper tier preferences. This small generalization suffices to change these stark implications. For a wide...
Persistent link: https://www.econbiz.de/10005822499
firms to leave the market, thereby affecting aggregate productivity. Since wage and productivity responses are endogenous …, our model is well suited to study the impacts of trade integration on aggregate productivity and factor prices. Using … quantify the impacts of removing the Canada-U.S. border on wages, productivity, markups, the share of exporters, the mass of …
Persistent link: https://www.econbiz.de/10005822765
We develop a model with two asymmetric countries. Firms choose the number and the location of plants that they operate. The production of each firm increases when trade costs fall. The fall also induces multinationals to repatriate their production into a single country, which is likely to be...
Persistent link: https://www.econbiz.de/10005823000