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The Interaction Between Technology Adoption and Trade When Firms are Heterogeneous

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  • Bulent Unel

Abstract

This paper develops a monopolistic competition model with heterogeneous firms to study the interaction between technology adoption and trade in a world of two countries facing different technology adoption costs. It shows that a reduction in the technology adoption cost in one country increases the productivity, induces more firms to adopt advanced technology, and improves welfare in this country, while decreasing the pro- ductivity, inducing more firms to switch back to old technology, and reducing welfare in the other country. Furthermore, although a reduction in transport costs always makes the country with lower adoption cost better off, it can hurt the other country.
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  • Bulent Unel, 2013. "The Interaction Between Technology Adoption and Trade When Firms are Heterogeneous," Review of International Economics, Wiley Blackwell, vol. 21(4), pages 797-808, September.
    • Handle: RePEc:bla:reviec:v:21:y:2013:i:4:p:797-808
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    File URL: http://hdl.handle.net/10.1111/roie.12071
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    Cited by:

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    3. Antonio Navas & Antonella Nocco, 2021. "Trade liberalization, selection, and technology adoption with vertical linkages," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 979-1012, September.
    4. Katrin Peters & Monika Schnitzer, 2015. "Trade liberalization and credit constraints: Why opening up may fail to promote convergence," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(3), pages 1099-1119, August.
    5. Dinopoulos, Elias & Unel, Bulent, 2015. "Entrepreneurs, jobs, and trade," European Economic Review, Elsevier, vol. 79(C), pages 93-112.
    6. Klügl, Franziska & Kyvik Nordås, Hildegunn, 2021. "AI-enabled Automation, Trade, and the Future of Engineering Services," Working Papers 2021:16, Örebro University, School of Business.
    7. Elias Dinopoulos & Bulent Unel, 2014. "Firm Productivity, Occupational Choice, and Inequality in a Global Economy (revised March 2015)," Departmental Working Papers 2014-04, Department of Economics, Louisiana State University.
    8. Rutzer, Christian, 2014. "From the Loser to the Winner - How Trade Liberalization can lead to Leapfrogging between Countries," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100313, Verein für Socialpolitik / German Economic Association.

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