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Multi-product Firms and Trade Liberalization

Listed author(s):
  • Stephen J Redding

    (London School of Economics and CEPR)

  • Peter K Schott

    (Yale School of Management and NBER)

  • Andrew B Bernard

    (Tuck School of Business and NBER)

This paper develops a general equilibrium model of international trade that features selection across firms, products and countries. Firms’ export decisions depend on a combination of firm “productivity” and firm-product-country “consumer tastes”, both of which are stochastic and unknown prior to the payment of a sunk cost of entry. Higher-productivity firms export a wider range of products to a larger set of countries than lower-productivity firms. Trade liberalization induces endogenous reallocations of resources that foster productivity growth both within and across firms. Empirically, we find key implications of the model to be consistent with U.S. trade data.

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File URL: https://economicdynamics.org/meetpapers/2007/paper_44.pdf
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Paper provided by Society for Economic Dynamics in its series 2007 Meeting Papers with number 44.

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Date of creation: 2007
Handle: RePEc:red:sed007:44
Contact details of provider: Postal:
Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

Web page: http://www.EconomicDynamics.org/
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