The Melitz model highlights the importance of the extensive margin (the number of firms exporting) for trade flows …-level productivity, fixed costs and demand shifters, and use 'exact hat algebra' to quantify the effects of a decline in trade costs on … trade flows and welfare in the estimated model. The welfare effects turn out to be quite close to those in the standard …

to a quasi-natural experiment induced by a trade reform in Colombia, we find that firms that have been more exposed to a …