The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity
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Citations
Markov Perfect Industry Dynamics with Many Firms
Globalization and the Welfare State: Testing the Microfoundations of the Compensation Hypothesis
Measuring Aggregate Productivity Growth Using Plant-Level Data
Theories of Heterogeneous Firms and Trade
Product and process innovation and firms' decision to export
References
Monopolistic competition and optimum product diversity
Scale Economies, Product Differentiation, and the Pattern of Trade
Increasing returns, monopolistic competition, and international trade
Entry, exit, and firm dynamics in long run equilibrium
Exceptional exporter performance : cause, effect, or both?
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Exceptional exporter performance : cause, effect, or both?
Frequently Asked Questions (10)
Q2. What are some other important explanatory characteristics that have been highlighted in some studies?
some studies have also found evidence that reallocations unrelated to entry and exit contribute to 1Firm age and capital vintage are other important explanatory characteristics that have been highlighted in some studies, although their impact may be limited to their effect on productivity.
Q3. How does the probability of entry increase?
As ϕ∗ increases, the probability of successful entry (pin = 1−G(ϕ∗)) decreases average proÞts must therefore increase for Þrms to remain indifferent about entry.
Q4. What is the effect of the export market selection effect on the productivity of rms?
This export market selection effect and the domestic market selection effect (of Þrms out of the industry) both reallocate market shares towards more efficient Þrms and contribute to an aggregate productivity gain.
Q5. What is the ratio of the average to cutoff rm revenue?
Since the average revenue level is always positive (even when ϕ∗ → 0), the ratio of the average to cutoff Þrm revenue becomes inÞnite as ϕ∗ goes to zero:
Q6. What is the main reason why trade-induced reallocations are so important?
These trade-induced reallocations towards more efficient Þrms explain why trade may generate aggregate productivity gains without necessarily improving the productive efficiency of individual Þrms.
Q7. What is the effect of the decrease in product variety on welfare?
Although the direction of the change in product variety is ambiguous (product variety will decrease so long as the ZCP curve is downward sloping), the decrease in aggregate productivity is enough to unambiguously entail a welfare loss (see appendix for proof).
Q8. What is the main reason for the absence of an upper bound on productivity?
The absence of an upper bound on productivity is assumed only for simplicity; an upper bound can be incorporated in the analysis without qualitatively changing any of the main results.
Q9. What is the main force that drives the hypothesis that increased productivity in Mexico s growing export industries?
Tybout and Westbrook (1995) test and reject the hypothesis that increased productivity in Mexico s growing export industries was driven by increases in the scale of plant production.
Q10. How does Hopenhayn explain the rm productivity dynamics?
Hopenhayn shows how these dynamics shape the equilibrium distribution of Þrm productivity and analyzes the impact of these dynamics on Þrm value and the performance of cohorts of Þrms over time.