Firm Heterogeneity and the Localization of Economic Activities
AbstractThis paper examines how market-access strategies, via exports and FDI, respond to changes in the level of integration. Empirical evidence shows that both firm exports and multinational activity are affected by trade-liberalization episodes. We account for the strong positive correlation between exports and FDI by developing a general-equilibrium model featuring firm heterogeneity, trade and FDI with final and intermediate products. Different geographical spaces are considered to quantify the effect of a preferential trade agreement (PTA) on supply-mode decisions, for both partner and excluded countries. The model sheds new light on the mechanisms through which geography reshapes the concentration of economic activities both inside and outside the PTA area.
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Date of creation: 27 Oct 2013
Date of revision:
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Heterogeneous firms; PTA; Spatial networks; Intra-firm trade;
Other versions of this item:
- Pamela Bombarda, 2013. "Firm Heterogeneity and the Localization of Economic Activities," THEMA Working Papers 2013-25, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F15 - International Economics - - Trade - - - Economic Integration
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-14 (All new papers)
- NEP-BEC-2013-11-14 (Business Economics)
- NEP-CSE-2013-11-14 (Economics of Strategic Management)
- NEP-GEO-2013-11-14 (Economic Geography)
- NEP-URE-2013-11-14 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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