The impact of trade with pure exporters

Bo Gao, Mich Tvede

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Abstract

We extend the Melitz model to include pure exporters and study how they influence economic performance. We find that the presence of pure exporters lowers the productivity premium of exporters. Moreover, if there is a large portion of pure exporters, then international trade lowers the average productivity, but not welfare. Moreover, we explore how trade liberalization in form of lower entry cost into foreign markets and lower variable export cost influences the distribution of firms between pure exporters, ordinary exporters and non-exporters.

Original languageEnglish
Pages (from-to)83-112
Number of pages30
JournalReview of International Economics
Volume30
Issue number1
Early online date25 Jun 2021
DOIs
Publication statusPublished - Feb 2022

Keywords

  • firm heterogeneity
  • productivity premium
  • pure exporters
  • trade liberalization

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