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Multimarket Linkages, Trade and the Productivity Puzzle
Author(s) -
Matsushima Noriaki,
Zhao Laixun
Publication year - 2015
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/roie.12155
Subject(s) - productivity , economics , key (lock) , industrial organization , microeconomics , international economics , international trade , macroeconomics , biology , ecology
This paper examines the relationship between firms’ productivity improvement and the volume of exports, and shows that it can be sometimes negative , which seems to be an empirical puzzle . The key lies in that we simultaneously take into account intermediate retailers (i.e. vertically) and multimarket linkages (i.e. horizontally). With convex cost functions, when market conditions worsen, the manufacturer increases supply to the retailer who is larger or more efficient in trade cost.