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Heterogeneous agrifood firms, agricultural prices and access to foreign markets

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  • Le Mener, Léo

Abstract

We analyze how a change in agricultural input price impacts the selection process and market shares in foreign markets for firms in the final agrifood good sector. To do so we develop a model with heterogeneous firms and intermediate good where input use is technologically constrained. We show that the effect of input price depends on labor productivity and fixed costs. Moreover, we show that a decrease in input price in all countries can decrease the probability to enter foreign markets, through export or horizontal foreign direct investment (HFDI). Finally, we show that the decrease of the intermediate good price always increases the share of HFDI relative to export, even if it can modify the HFDI-Export trade-off in favor of HFDI or export.

Suggested Citation

  • Le Mener, Léo, 2015. "Heterogeneous agrifood firms, agricultural prices and access to foreign markets," Working Papers 210101, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
    • Handle: RePEc:ags:inrasl:210101
    DOI: 10.22004/ag.econ.210101
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