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Welfare in models of trade with heterogeneous firms

  • Alexandre Janiak

    ()

I illustrate that the welfare improvement property of the Melitz model is due to the shape of the aggregate labor demand curve, which slopes upwards. By slightly changing some assumptions in the model, this curve may have a negative slope. In this case, increases in aggregate productivity result in a reduction in welfare. For example, this may occur when fixed costs are measured in units of aggregate output instead of labor.JEL codes: F12, F16, J23.

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File URL: http://www.dii.uchile.cl/~cea/sitedev/cea/www/download.php?file=documentos_trabajo/ASOCFILE120081024122354.pdf
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Paper provided by Centro de Economía Aplicada, Universidad de Chile in its series Documentos de Trabajo with number 253.

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Date of creation: 2008
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Handle: RePEc:edj:ceauch:253
Contact details of provider: Web page: http://www.dii.uchile.cl/cea/

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  1. Gabriel Felbermayr & Julien Prat, 2011. "Product Market Regulation, Firm Selection, And Unemployment," Journal of the European Economic Association, European Economic Association, vol. 9(2), pages 278-317, 04.
  2. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2007. "The Basic Public Finance of Public-Private Partnerships," Documentos de Trabajo 234, Centro de Economía Aplicada, Universidad de Chile.
  3. Eduardo Engel & Ronald Fischer, 2008. "Optimal Resource Extraction Contracts Under Threat of Expropriation," NBER Working Papers 13742, National Bureau of Economic Research, Inc.
  4. Marc J. Melitz & Gianmarco I. P. Ottaviano, 2008. "Market Size, Trade, and Productivity," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 295-316.
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  13. Morrison, Catherine J, 1986. "Structural Models of Dynamic Factor Demands with Nonstatic Expectations: An Empirical Assessment of Alternative Expectations Specifications," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(2), pages 365-86, June.
  14. M. Soledad Arellano & José Miguel Benavente, 2007. "Sustitución entre Telefonía Fija y Móvil en Chile," Documentos de Trabajo 233, Centro de Economía Aplicada, Universidad de Chile.
  15. Quentin David & Alexandre Janiak & Etienne Wasmer, 2008. "Local social capital and geographical mobility. A theory," Documentos de Trabajo 248, Centro de Economía Aplicada, Universidad de Chile.
  16. Sebátian Infante & Nicolás Figueroa & Ronald Fischer, 2007. "Competition with asymmetric switching costs," Documentos de Trabajo 241, Centro de Economía Aplicada, Universidad de Chile.
  17. Ronald Fischer, 2008. "Política comercial estratégica en el mercado aéreo chileno," Documentos de Trabajo 246, Centro de Economía Aplicada, Universidad de Chile.
  18. Nicolás Figueroa & Ronald Fischer & Sebastian Infante, 2008. "Loyalty inducing programs and competition with homogeneous goods," Documentos de Trabajo 249, Centro de Economía Aplicada, Universidad de Chile.
  19. Viviana Fernández & Brian M. Lucey, 2008. "Emerging Markets Variance Shocks: Local or International in Origin?," Documentos de Trabajo 251, Centro de Economía Aplicada, Universidad de Chile.
  20. M. Soledad Arellano & Pablo Serra, 2007. "Marginal Cost Pricing in Hydro-Thermal Power Industries: Is a Capacity Charge Always Needed?," Documentos de Trabajo 238, Centro de Economía Aplicada, Universidad de Chile.
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