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Openness to Trade and Industry Cost Dispersion: Evidence from a Panel of Italian Firms

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Author Info
Del Gatto, Massimo
Ottaviano, Gianmarco I P
Pagnini, Marcello

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Abstract

We use Italian firm-level data to investigate the impact of trade openness on the distribution of firms across marginal cost levels. In so doing, we implement a procedure that allows us to control not only for the standard transmission bias identified in firm-level TFP regressions but also for the omitted price bias due to imperfect competition. We find that more open industries are characterized by a smaller dispersion of costs across active firms. Moreover, in those industries the average cost is also smaller.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6336.

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Date of creation: Jun 2007
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Handle: RePEc:cpr:ceprdp:6336

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Keywords: Cost dispersion firm selection firm-level data openness to trade total factor productivity

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Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
F15 - International Economics - - Trade - - - Economic Integration
R13 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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  1. ITO Keiko & Sebastien LECHEVALIER, 2008. "The evolution of the productivity dispersion of firms - A reevaluation of its determinants in the case of Japan," Discussion papers 08014, Research Institute of Economy, Trade and Industry (RIETI). [Downloadable!]
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