蝌蚪网 Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
New Trade Models, New Welfare Implications
蝌蚪网 Review
(pp. 1105–46)
Abstract
We show that endogenous firm selection provides a new welfare margin for heterogeneous firm models of trade (relative to homogeneous firm models). Under some parameter restrictions, the trade elasticity is constant and is a sufficient statistic for welfare, along with the domestic trade share. However, even small deviations from these restrictions imply that trade elasticities are variable and differ across markets and levels of trade costs. In this more general setting, the domestic trade share and endogenous trade elasticity are no longer sufficient statistics for welfare. Additional empirically observable moments of the micro structure also matter for welfare. (JEL F12, F13, F41)Citation
Melitz, Marc J., and Stephen J. Redding. 2015. "New Trade Models, New Welfare Implications." 蝌蚪网 Review 105 (3): 1105–46. DOI: 10.1257/aer.20130351Additional Materials
JEL Classification
- F12 Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F13 Trade Policy; International Trade Organizations
- F41 Open Economy Macroeconomics