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International trade with heterogeneous firms: An interactive classroom simulation

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  • Nathaniel P. S. Cook
  • Angie Pantuosco

Abstract

In this article, the authors describe an interactive classroom simulation that helps students learn some of the most important ideas from models of international trade with heterogeneous firms. Students make entry/exit decisions for individual firms with different marginal costs of production. The simulation consists of five rounds, beginning with autarky and progressively liberalizing trade. In each round, students interactively determine each firm’s equilibrium entry/exit decision by responding in real time to how their individual firm’s profit is affected by the decisions of all of the other firms. Empirical evidence from a pre–post assessment of students who participated in the simulation in the fall of 2019 demonstrates a significant increase in student understanding of international trade with heterogeneous firms after participating in the simulation.

Suggested Citation

  • Nathaniel P. S. Cook & Angie Pantuosco, 2022. "International trade with heterogeneous firms: An interactive classroom simulation," The Journal of Economic Education, Taylor & Francis Journals, vol. 53(1), pages 31-42, January.
    • Handle: RePEc:taf:jeduce:v:53:y:2022:i:1:p:31-42
    DOI: 10.1080/00220485.2021.2004275
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    Cited by:

    1. Alejandro Riaño, 2023. "Reproducing the Stylized Facts that Motivate Models of International Trade with Heterogeneous Firms Using the World Bank Enterprise Surveys," CESifo Working Paper Series 10816, CESifo.

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