Download or read book Falling Trade Costs Heterogeneous Firms and Industry Dynamics written by and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Falling Trade Costs Heterogeneous Firms and Industry Dynamics written by Andrew B. Bernard and published by . This book was released on 2003 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the response of industries and firms to changes in trade costs. Several new firm-level models of international trade with heterogeneous firms predict that industry productivity will rise as trade costs fall due to the reallocation of activity across plants within an industry. Using disaggregated U.S. import data, we create a new measure of trade costs over time and industries. As the models predict, productivity growth is faster in industries with falling trade costs. We also find evidence supporting the major hypotheses of the heterogenous-firm models. Plants in industries with falling trade costs are more likely to die or become exporters. Existing exporters increase their shipments abroad. The results do not apply equally across all sectors but are strongest for industries most likely to be producing horizontally-differentiated tradeable goods.
Download or read book Falling Trade Costs Heterogenous Firms and Industry Dynamics written by Andrew B. Bernard and published by . This book was released on 2003 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Falling Trade Costs Heterogeneous Firms and Industy Dynamics written by Andrew B. Bernard and published by . This book was released on 2003 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Trade Costs and Business Dynamics in U S Regions and Industries written by Qian Wu and published by . This book was released on 2012 with total page 141 pages. Available in PDF, EPUB and Kindle. Book excerpt: Firms' participation in exporting or foreign direct investment is an extremely rare behavior: only 4 percent of over 5.5 million U.S. firms were exporters in 2000. Exporters are generally larger (e.g. output and employment) and more productive than firms serving only domestic markets. Such heterogeneity within a narrowly defined industry cannot be fully explained by either comparative advantage arguments or the presence of scale economies and consumers' love of variety. Recent studies of heterogeneous firms show that a reduction in trade costs, i.e. policy, geographic and institutional barriers, has two effects within an industry previously not recognized in trade literature: (i) exit of low productivity firms, and (ii) resource reallocation in favor of high productivity firms. These two effects combine to raise an industry's average productivity and overall welfare, but can adversely affect some regions of an economy with firm closures or job losses. The objective of this dissertation is to examine the effects of trade costs on firm entry, exit, and employment at a regional level in the United States. For this purpose, industry-specific trade costs by U.S. regions are derived and their underlying sources are examined. The chosen trade-costs measure, based on the gravity equation, captures the variation over time in trade fictions among countries. Data from the Census Bureau and the World Bank are employed to quantify trade costs by U.S. industries and regions. Results show that a single measure of trade costs for the United States does not adequately represent the large number of and diverse regions through which trade in agriculture and manufacturing occurs. Moreover, geographic factors appear to be relatively more important than policy barriers in explaining the level of trade costs faced by U.S. regions. Drawing on recent heterogeneous firms models, this dissertation specifies an empirical framework to examine: (i) firm entry or exit arising from changes in trade costs, i.e. extensive margin, and (ii) changes in employment of surviving firms creation arising from changes in trade costs, i.e. intensive margin. These two hypotheses are tested using regional business dynamics data from the Census Bureau and trade cost measures derived earlier. Results show that trade cost changes affect firm exit and employment as hypothesized. That is, lowering trade costs increases the likelihood of firm exit, presumably of the low-productivity ones. Thus, trade costs, by way of the extensive margin, affect an industry's average productivity. Similarly, trade costs appear to affect the employment of surviving firms suggesting that the intensive margin also operates to improve average productivity of an industry, such as through resource reallocation towards high-productivity firms. The intra-industry reallocation of resources to high productivity firms is an important source of gains from trade to the whole economy. Nonetheless, some regions face firm exit and job losses. In assessing the gains from trade, attention must be paid to the distributional consequences of resource reallocation within an industry as well as a country.
Download or read book Comparative Advantage and Heterogeneous Firms written by Andrew B. Bernard and published by . This book was released on 2006 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines how country, industry and firm characteristics interact in general equilibrium to determine nations' responses to trade liberalization. When firms possess heterogeneous productivity, countries differ in relative factor abundance and industries vary in factor intensity, falling trade costs induce reallocations of resources both within and across industries and countries. These reallocations generate substantial job turnover in all sectors, spur relatively more creative destruction in comparative advantage industries than comparative disadvantage industries, and magnify ex ante comparative advantage to create additional welfare gains from trade. The relative ascendance of high-productivity firms within industries boosts aggregate productivity and drives down consumer prices. In contrast with the neoclassical model, these price declines dampen and can even reverse the real wage losses of scarce factors as countries liberalize.
Download or read book What is the Impact of Increased Business Competition written by Sónia Félix and published by International Monetary Fund. This book was released on 2019-12-13 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies the macroeconomic effect and underlying firm-level transmission channels of a reduction in business entry costs. We provide novel evidence on the response of firms' entry, exit, and employment decisions. To do so, we use as a natural experiment a reform in Portugal that reduced entry time and costs. Using the staggered implementation of the policy across the Portuguese municipalities, we find that the reform increased local entry and employment by, respectively, 25% and 4.8% per year in its first four years of implementation. Moreover, around 60% of the increase in employment came from incumbent firms expanding their size, with most of the rise occurring among the most productive firms. Standard models of firm dynamics, which assume a constant elasticity of substitution, are inconsistent with the expansionary and heterogeneous response across incumbent firms. We show that in a model with heterogeneous firms and variable markups the most productive firms face a lower demand elasticity and expand their employment in response to increased entry.
Download or read book Search Externalities in Firm to Firm Trade written by John Spray and published by International Monetary Fund. This book was released on 2021-03-19 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt: I develop a model of firm-to-firm search and matching to show that the impact of falling trade costs on firm sourcing decisions and consumer welfare depends on the relative size of search externalities in domestic and international markets. These externalities can be positive if firms share information about potential matches, or negative if the market is congested. Using unique firm-to-firm transaction-level data from Uganda, I document empirical evidence consistent with positive externalities in international markets and negative externalities in domestic markets. I then build a dynamic quantitative version of the model and show that, in Uganda, a 25% reduction in trade costs led to a 3.7% increase in consumer welfare, 12% of which was due to search externalities.
Download or read book A Dynamic Model of Trade with Heterogeneous Firms written by Peter Arendorf Bache and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Macroeconomic Impact of Firm level Heterogeneity written by Tom Schmitz and published by . This book was released on 2015 with total page 77 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this thesis, I show that macroeconomic models which take into account firm- and industrylevel heterogeneity provide a more precise understanding of productivity growth dynamics than models with just one firm or industry. The first chapter is dedicated to cyclical fluctuations in innovation, and highlights the role of the size distribution of innovating firms. Small and young innovating firms are especially important for innovation and productivity growth, but I show that they also suffer most from economic and financial crises. As a result, crises persistently shift the size distribution of innovating firms to the right, and this persistently depresses productivity growth. The size distribution also creates a link between growth and volatility at the industry level. In the second chapter, I analyse how firm-level innovation decisions and aggregate productivity growth are affected by expansions in international trade. I show that the growth effects of trade depend on whether its expansion is due to falling trade costs for products which were already tradable, or to the possibility to trade products which were not traded before.
Download or read book Firm Dynamics and Residual Inequality in Open Economies written by Gabriel J. Felbermayr and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Heterogeneous Firms and Trade written by Richard E. Baldwin and published by . This book was released on 2005 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper sets out a basic heterogeneous-firms trade model that is closely akin to Melitz (2003). The positive and normative properties of the model are studied in a manner intended to highlight the core economic logic of the model. The paper also studies the impact of greater openness at the firm-level and aggregate level, focusing on changes in the number and type of firms, trade volumes and prices, and productivity effects. The normative effects of liberalisation are also studied and here the paper focuses on aggregate gains from trade, and income redistribution effects, showing inter alia that the model is marked by a Stolper-Samuelson like effect. A number of empirically testable hypotheses are also developed. These concern the impact of greater openness on the firm-level trade pattern, the variance of unit-prices, the stock market valuation of firms according to size, and the lobbying behaviour by size.
Download or read book Firm Heterogeneity and Participation in Trade Politics written by Lipei Tao and published by . This book was released on 2017 with total page 118 pages. Available in PDF, EPUB and Kindle. Book excerpt: Industries seeking trade protection are commonly interpreted to be motivated by the economic gains stemming from decreased foreign competition. Yet, while protection for an industry results in reduced competition for all domestic industry members, a question that remains is why some firms in protected industries do not seek protection or even actively oppose trade protection for their industry. This paper studies participation in trade policy from a heterogeneous firms perspective. Using AD cases initiated between 2010 and 2015 in the European Union, I identify study the differences between firms that lodge antidumping complaints compared to peers within the same industries that did not participate in the complaints. firms in industries that participated in antidumping petitions. Comparing firm-level characteristics of firms that participate in antidumping petitions to firms that do not participate, I develop three main insights of the determinants of firm participation in trade policy. First, firms that are relatively larger and less productive are more likely to initiate an AD complaint. Second, firms with falling productivity levels are relatively more likely to initiate an AD complaint. This result indicates that AD policy is an instrument used more frequently by producers that are less productive than their peers.
Download or read book Firm Dynamics and Residual Inequality in Open Economies written by Gabriel J. Felbermayr and published by . This book was released on 2014 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: Increasing wage inequality between similar workers plays an important role for overall inequality trends in industrialized societies. To analyze this pattern, we incorporate directed labor market search into a dynamic model of international trade with heterogeneous firms and homogeneous workers. Wage inequality across and within firms results from their different hiring needs along their life cycles and the convexity of their adjustment costs. The interaction between wage posting and firm growth explains some recent empirical regularities on firm and labor market dynamics. Fitting the model to capture key features obtained from German linked employer-employee data, we investigate how falling trade costs and institutional reforms interact in shaping labor market outcomes. Focusing on the period 1996-2007, we find that neither trade nor key features of the Hartz labor market reforms account for the sharp increase in residual inequality observed in the data. By contrast, inequality is highly responsive to the increase in product market competition triggered by domestic regulatory reform.
Download or read book Producer Dynamics written by Timothy Dunne and published by University of Chicago Press. This book was released on 2009-05-15 with total page 623 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Census Bureau has recently begun releasing official statistics that measure the movements of firms in and out of business and workers in and out of jobs. The economic analyses in Producer Dynamics exploit this newly available data on establishments, firms, and workers, to address issues in industrial organization, labor, growth, macroeconomics, and international trade. This innovative volume brings together a group of renowned economists to probe topics such as firm dynamics across countries; patterns of employment dynamics; firm dynamics in nonmanufacturing industries such as retail, health services, and agriculture; employer-employee turnover from matched worker/firm data sets; and turnover in international markets. Producer Dynamics will serve as an invaluable reference to economists and policy makers seeking to understand the links between firms and workers, and the sources of economic dynamics, in the age of globalization.
Download or read book Trade Costs and Quality written by Eric H. Tseng and published by . This book was released on 2016 with total page 112 pages. Available in PDF, EPUB and Kindle. Book excerpt: The first chapter examines the role that trade costs and sunk investment costs play in affecting firm production decisions with respect to quality, market selection, and export selection. Deriving a complete theoretical model that integrates the quality of intermediate inputs and outputs in a food and agricultural setting, this analysis finds that falling trade costs should induce the production of higher-quality goods, the sorting of the most productive non-exporters into the export market, and the least productive firms to select out of the market. Additionally, how sunk investment costs to upgrade quality affect market and export selection depends on the parameters of the capability distribution (i.e., market structure) and the structure of fixed costs. These results are translated into an empirical framework to show strong evidence for firms utilizing input complementarity in production and the impact of sunk investment costs on a firm’s quality choices, market selection and export selection. Some evidence for the role of trade costs on quality choices, market selection, and export selection is presented. The second chapter analyzes the firm’s reshoring choice from a theoretical perspective. Due to uncertainty embedded in the contract that previously fragmented production of the intermediate input, it is possible for final good producers to decide that producing upstream goods domestically is more profitable despite the cost disadvantage. Through this offshoring and reshoring framework, the final good producer’s reshoring decision is analyzed in detail to show when the firm reshores the production of the intermediate input and the economic welfare impact of such a decision. Results show that the quality distortion and welfare loss seen in the offshoring and free-trade equilibrium outcome can be resolved entirely through reshoring. However, reshoring cannot resolve the quantity holdup problem and the resulting welfare loss, even when investments to reduce cost disadvantages and government subsidy are included. Examining the government subsidy problem further reveals that the government may subsidize more or less under political economy, since the cost of the policy’s impact on welfare motivates the government’s decision. The third chapter examines the impact of trade costs and financial constraints on firm performance, as measured by revenue per worker. A heterogeneous-firms framework is used to analyze the impact of these variables by endogenizing the firm’s technological choice, showing that when trade costs fall and when financial constraints loosen, firm performance as measured by revenue per worker will improve for the remaining firms in the market. These theoretical results are translated into an empirical framework that tests out these hypotheses in a cross-sectional firm-level data set from multiple countries, an empirical extension that has not been seen in the prior literature. In addition, this analysis notably introduces firm-level measures and predictors for their level of financial constraints as opposed to the more common industrial-level measures. Overall, the econometric analysis shows reasonable support for the model across six separate specifications, but this is heavily dependent on introducing or excluding various country- and industry-specific effects and additional firm attributes as controls.
Download or read book International Trade and Macroeconomics Dynamics with Heterogeneous Firms written by Fabio Ghironi and published by . This book was released on 2004 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: