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Author: Mark Andrew Dutz
Publisher: World Bank Publications
Published: 1991
Total Pages: 51
ISBN-13:
DOWNLOAD EBOOKOutput among firms is likely to be reallocated as a result of trade liberalization. In imperfectly competitive industries, such a "rationalization" effect can be an important component of the welfare impact of trade reform.
Author: Monica Das Gupta
Publisher:
Published: 2017
Total Pages: 51
ISBN-13:
DOWNLOAD EBOOKOver the period 1984 to 1987, a major liberalization of restrictive trade policies was implemented in the Moroccan manufacturing sector. The level of imports changed across different industries according to each industryamp;apos;s degree of liberalization. The paper focuses on exploring the distribution of output adjustment among incumbent firms to the changes in imports following a particular trade liberalization episode. A domestic oligopoly model where competing firms are not equally efficient, with perfectly substitutable imports fixed at some exogenous pre-reform level, provides the theoretical framework for the study. Such a model predicts that firm output contraction will be larger the greater the increase in imports. The results represent a first step in the analysis of firm adjustment to trade liberalization. While the paper shows that output in small firms contracts more than output in large firms, it presents no evidence of a shift of production from small to large firms.
Author: James A. COSTANTINI
Publisher:
Published: 2008
Total Pages: 0
ISBN-13:
DOWNLOAD EBOOKAuthor: Andrew B. Bernard
Publisher:
Published: 2006
Total Pages: 66
ISBN-13:
DOWNLOAD EBOOKThis paper develops a general equilibrium model of multi-product firms and analyzes their behavior during trade liberalization. Firm productivity in a given product is modeled as a combination of firm-level "ability" and firm-product-level "expertise", both of which are stochastic and unknown prior to the firm's payment of a sunk cost of entry. Higher firm-level ability raises a firm's productivity across all products, which induces a positive correlation between a firm's intensive (output per product) and extensive (number of products) margins. Trade liberalization fosters productivity growth within and across firms and in aggregate by inducing firms to shed marginally productive products and forcing the lowest-productivity firms to exit. Though exporters produce a smaller range of products after liberalization, they increase the share of products sold abroad as well as exports per product. All of these adjustments are shown to be relatively more pronounced in countries' comparative advantage industries.
Author: Gordon Howard Hanson
Publisher:
Published: 1994
Total Pages: 60
ISBN-13:
DOWNLOAD EBOOKIn this paper, I study the effect of economic integration with the United States on state-industry employment growth in Mexico. I disentangle the effects of two opposing forces on regional labor demand: transport-cost considerations, which, all else equal, encourage firms to relocate their activities to regions with relatively good access to foreign markets, and agglomeration economies, which, all else equal, reinforce the pre-trade pattern of industry location. I find that trade liberalization has strong effects on industry location. Consistent with the transport-costs hypothesis, post-trade employment growth is higher in state-industries that are relatively close to the United States. The results on agglomeration effects are mixed. Employment growth is higher where agglomeration in upstream and downstream industries is higher, but not where the agglomeration of firms in the same industry is higher. The results suggest trade liberalization has contributed to the decomposition of the manufacturing belt in and around Mexico City and the formation of broadly specialized industry centers located in northern Mexico, relatively close to the United States. The North American Free Trade Agreement is likely to reinforce these movements.
Author: Ariel Burstein
Publisher:
Published: 2011
Total Pages: 38
ISBN-13:
DOWNLOAD EBOOKAbstract: In this paper, we analyze the transition dynamics associated with an economy's response to trade liberalization. We start by reviewing the recent literature that incorporates firm dynamics into models of international trade. We then build upon that literature to characterize the role of firm dynamics, export-market selection, firm-level innovation, and firms' expectations regarding the time path of liberalization in generating those transition dynamics following trade liberalization. These modeling ingredients generate substantial aggregate transition dynamics as they shift and shape the endogenous distribution of firms over time. Our results show how the responses of trade volumes, innovation, and aggregate output can vary greatly over time depending on those modeling ingredients. This has important consequences for many issues in international economics that rely on predictions for the effects of globalization over time on those key aggregate outcomes
Author: Ariel T. Burstein
Publisher:
Published: 2011
Total Pages: 45
ISBN-13:
DOWNLOAD EBOOKAbstract: In this paper, we analyze the transition dynamics associated with an economy's response to trade liberalization. We start by reviewing the recent literature that incorporates firm dynamics into models of international trade. We then build upon that literature to characterize the role of firm dynamics, export-market selection, firm-level innovation, and firms' expectations regarding the time path of liberalization in generating those transition dynamics following trade liberalization. These modeling ingredients generate substantial aggregate transition dynamics as they shift and shape the endogenous distribution of firms over time. Our results show how the responses of trade volumes, innovation, and aggregate output can vary greatly over time depending on those modeling ingredients. This has important consequences for many issues in international economics that rely on predictions for the effects of globalization over time on those key aggregate outcomes
Author: Lawrence Herbert Goulder
Publisher:
Published: 1989
Total Pages: 60
ISBN-13:
DOWNLOAD EBOOKThis paper uses a dynamic computable general equilibrium model to simulate the effects of unilateral reductions by the U.S. in tariffs and "voluntary" export restraints (VER's). We consider 50 percent cuts in tariffs and in ad valorem VER equivalents, separately and in combination. The model features intertemporal optimization by households and firms, explicit adjustment dynamics, an integrated treatment of the current and capital accounts of the balance of payments, and industry disaggregation. Central findings include: (1) VER's are considerably more significant than tariffs in terms of the magnitude of the macroeconomic effects induced by their reduction; (2) while VER reductions enhance domestic welfare, unilateral tariff cuts reduce domestic welfare (as a consequence of U.S. monopsony power and associated adverse terms of trade effects); (3) international capital movements critically regulate the responses of the U.S. and foreign economies to these trade initiatives and produce significant differences between short and long-run effects; and (4) effects differ substantially across industries. Together, these findings indicate that simulation analyses that disregard international capital movements, adjustment dynamics, and industry differences may generate seriously misleading results
Author:
Publisher:
Published: 2012
Total Pages: 0
ISBN-13:
DOWNLOAD EBOOKThis paper examines how prices, markups and marginal costs respond to trade liberalization. We develop a framework to estimate markups from production data with multi-product firms. This approach does not require assumptions on the market structure or demand curves faced by firms, nor assumptions on how firms allocate their inputs across products. We exploit quantity and price information to disentangle markups from quantity-based productivity, and then compute marginal costs by dividing observed prices by the estimated markups. We use India's trade liberalization episode to examine how firms adjust these performance measures. Not surprisingly, we find that trade liberalization lowers factory-gate prices and that output tariff declines have the expected pro-competitive effects. However, the price declines are small relative to the declines in marginal costs, which fall predominantly because of the input tariff liberalization. The reason for this incomplete cost pass-through to prices is that firms offset their reductions in marginal costs by raising markups. Our results demonstrate substantial heterogeneity and variability in markups across firms and time and suggest that producers benefited relative to consumers, at least immediately after the reforms.
Author: Mauricio Mesquita Moreira
Publisher:
Published: 2019-11-07
Total Pages:
ISBN-13: 9781597823647
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