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The opportunity costs of entrepreneurs in international trade

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  • Kehoe, Timothy J.
  • Pujolàs, Pau S.
  • Ruhl, Kim J.

Abstract

We show that a trade model with an exogenous set of heterogeneous firms with fixed operating costs has the same aggregate outcomes as a span-of-control model. Fixed costs in the heterogeneous-firm model are entrepreneurs’ forgone wages in the span-of-control model.

Suggested Citation

  • Kehoe, Timothy J. & Pujolàs, Pau S. & Ruhl, Kim J., 2016. "The opportunity costs of entrepreneurs in international trade," Economics Letters, Elsevier, vol. 146(C), pages 1-3.
  • Handle: RePEc:eee:ecolet:v:146:y:2016:i:c:p:1-3
    DOI: 10.1016/j.econlet.2016.07.012
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    6. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-1721, September.
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    8. repec:hal:spmain:info:hdl:2441/6apm7lruv088iagm4rv2c33jtg is not listed on IDEAS
    9. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," Post-Print hal-03579844, HAL.
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    Cited by:

    1. Mădălina-Gabriela ANGHEL & Ștefan Virgil IACOB & Dragoș Alexandru HAȘEGAN, 2020. "The analysis of the international trade of Romania," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(1(622), S), pages 183-200, Spring.
    2. Gáfaro, Margarita & Pellegrina, Heitor S., 2022. "Trade, farmers’ heterogeneity, and agricultural productivity: Evidence from Colombia," Journal of International Economics, Elsevier, vol. 137(C).
    3. Margarita Gafaro & Heitor S. Pellegrina, 2018. "Market access, agricultural productivity and selection into trade: evidence from Colombia," Borradores de Economia 1050, Banco de la Republica de Colombia.

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    More about this item

    Keywords

    Span-of-control model; Firm heterogeneity; Income distribution; International trade;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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