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Asymmetric Monotone Comparative Statics for the Industry Compositions

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  • Anders Rosenstand Laugesen

    () (Department of Economics and Business Economics, Aarhus University, Denmark)

Abstract

Within a standard model of international trade with heterogeneous firms and two asymmetric countries, we derive sufficient conditions for monotone comparative statics (MCS) for the industry composition. This model outcome is defined as first-order stochastic dominance shifts in the equilibrium distributions of all activities across active firms. MCS for the industry composition occurs in a country which experiences a decline in its costs of serving the foreign market and meanwhile experiences an increase in its level of competition. In the other country, the industry-level implications are exactly opposite. These clear industry-level results hold while firms respond asymmetrically to the trade shock

Suggested Citation

  • Anders Rosenstand Laugesen, 2015. "Asymmetric Monotone Comparative Statics for the Industry Compositions," Economics Working Papers 2015-22, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2015-22
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    References listed on IDEAS

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    Cited by:

    1. Anders Rosenstand Laugesen, 2015. "Extensive Margins of Offshoring and Exporting," Economics Working Papers 2015-24, Department of Economics and Business Economics, Aarhus University.

    More about this item

    Keywords

    Complementary Activities; Firm Heterogeneity; Firm-Size Distribution; Exporting; Asymmetries;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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