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Export variety and country productivity: Estimating the monopolistic competition model with endogenous productivity

  • Feenstra, Robert
  • Kee, Hiau Looi

This paper provides evidence on the monopolistic competition model with heterogeneous firms and endogenous productivity. We show that this model has a well-defined GDP function where relative export variety enters positively, and estimate this function over 48 countries from 1980 to 2000. Average export variety to the United States increases by 3.3% per year, so it nearly doubles over these two decades. The total increase in export variety is associated with a 3.3% average productivity improvement for exporters over the two decades. Overall, the model can explain 31% of the within-country variation in productivity (or 52% for the OECD countries), but only a very small fraction of the between-country variation in productivity.

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Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 74 (2008)
Issue (Month): 2 (March)
Pages: 500-518

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Handle: RePEc:eee:inecon:v:74:y:2008:i:2:p:500-518
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505552

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