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Openness To Trade And Industry Cost Dispersion: Evidence From A Panel Of Italian Firms

  • Massimo Del Gatto
  • Gianmarco I. P. Ottaviano
  • Marcello Pagnini

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. Copyright Blackwell Publishing, Inc. 2008

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Article provided by Wiley Blackwell in its journal Journal of Regional Science.

Volume (Year): 48 (2008)
Issue (Month): 1 ()
Pages: 97-129

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Handle: RePEc:bla:jregsc:v:48:y:2008:i:1:p:97-129
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