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Asymmetric Monotone Comparative Statics for the Industry Compositions

Listed author(s):
  • Anders Rosenstand Laugesen

    ()

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

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    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

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    File URL: ftp://ftp.econ.au.dk/afn/wp/15/wp15_22.pdf
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    Paper provided by Department of Economics and Business Economics, Aarhus University in its series Economics Working Papers with number 2015-22.

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    Length: 30
    Date of creation: 11 2015
    Handle: RePEc:aah:aarhec:2015-22
    Contact details of provider: Web page: http://www.econ.au.dk/afn/

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