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
Number of pages48
JournalReview of International Economics
Early online date25 Jun 2021
DOIs
Publication statusE-pub ahead of print - 25 Jun 2021

Keywords

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

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