Cross-Sector Spillover Effects of Trade Liberalization

• Autores: Aleksandr Vashchilko
• Localización: XVII Encuentro de Economía Pública: políticas públicas ante la crisis, 2010, pág. 3
• Idioma: inglés
• Texto completo no disponible (Saber más ...)
• Resumen

  • This work studies the e¤ect of changes in trade barriers on the average productivity of .rms and the number of .rms in a two-country two-sector model with monopolistic competition market structure and heterogeneous .rms in one sector and perfect competion market struc- ture in the other sector. The direct e¤ect of the reduction in a sector.s variable trade cost on the average productivity of .rms in the same sector of any country is positive, which is in agreement with Melitz (2003). The spillover e¤ect of the reduction in a sector.s variable trade cost on the average productivity of .rms in the other sector is sector dependent. The aver- age productivity of .rms increases and the number of active .rms decreases in comparative advantage sector in the response to the trade liberalization in the other sector. Conversely, the average productivity of .rms decreases and the number of active .rms increases in com- parative disadvantage sector in the response to trade liberalization in the other sector. The trade liberalization in both sectors implies the combination of the direct and spillover e¤ects on the sector with monopolistic competition market structure and heterogeneous .rms.