Arbeitspapier

Dynamic Selection and the New Gains from Trade with Heterogeneous Firms

This paper develops an open economy growth model in which firm heterogeneity increases the gains from trade. Technology spillovers from incumbent firms to entrants cause the productivity threshold for firm survival to grow over time as competition becomes tougher. By raising the profits of exporters, trade increases the entry rate and generates a dynamic selection effect that leads to higher growth. The paper shows that the gains from trade can be decomposed into: static gains that equal the total gains from trade in an economy without technology spillovers, and; dynamic gains that are strictly positive. Since trade raises growth through selection, not scale effects, the positive growth effect of trade vanishes when firms are homogeneous. Thus, firm heterogeneity creates a new source of dynamic gains from trade. Calibrating the model to the U.S. economy implies that dynamic selection approximately triples the gains from trade.

Sprache
Englisch

Erschienen in
Series: FIW Working Paper ; No. 122

Klassifikation
Wirtschaft
Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
Economic Growth of Open Economies
One, Two, and Multisector Growth Models
Thema
Gains from Trade
Endogenous Growth
Firm Heterogeneity

Ereignis
Geistige Schöpfung
(wer)
Sampson, Thomas
Ereignis
Veröffentlichung
(wer)
FIW - Research Centre International Economics
(wo)
Vienna
(wann)
2013

Handle
Letzte Aktualisierung
10.03.2025, 11:44 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Sampson, Thomas
  • FIW - Research Centre International Economics

Entstanden

  • 2013

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