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Trade Liberalization and Heterogeneous Technology Investments

Author

Listed:
  • Maria Bas

    () (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Ivan Ledezma

    () (LEDi - Laboratoire d'Economie de Dijon - UB - Université de Bourgogne - CNRS - Centre National de la Recherche Scientifique)

Abstract

We propose a trade model where heterogeneous firms decide on a productivity-enhancing technology investment. The model analyzes the impact of multilateral trade liberalization on firm- and industry-level productivity. Freer trade increases the incentives to invest in technology by raising export profits. It also dampens these incentives, however, as profits stemming from domestic sales are reduced. Only exporters benefit from the former positive effect. The shape of the distribution of efficiency draws, the level of trade costs and the technology intensity of the industry are key elements removing the ambiguities regarding the net impact of trade liberalization.

Suggested Citation

  • Maria Bas & Ivan Ledezma, 2015. "Trade Liberalization and Heterogeneous Technology Investments," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01297160, HAL.
  • Handle: RePEc:hal:cesptp:hal-01297160
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01297160
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    Cited by:

    1. Maria Bas & Antoine Berthou, 2017. "Does Input-Trade Liberalization Affect Firms’ Foreign Technology Choice?," World Bank Economic Review, World Bank Group, vol. 31(2), pages 351-384.
    2. repec:eee:reveco:v:49:y:2017:i:c:p:582-595 is not listed on IDEAS
    3. repec:tou:journl:v:45:y:2017:p:79-97 is not listed on IDEAS

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