Premium
The impact of trade with pure exporters
Author(s) -
Gao Bo,
Tvede Mich
Publication year - 2022
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.12554
Subject(s) - productivity , economics , welfare , international economics , free trade , variable (mathematics) , international trade , distribution (mathematics) , fixed cost , monetary economics , microeconomics , macroeconomics , mathematical analysis , mathematics , market economy
We extend the Melitz model to include pure exporters and study how they influence economic performance. We find that the presence of pure exporters lowers the productivity premium of exporters. Moreover, if there is a large portion of pure exporters, then international trade lowers the average productivity, but not welfare. Moreover, we explore how trade liberalization in form of lower entry cost into foreign markets and lower variable export cost influences the distribution of firms between pure exporters, ordinary exporters and non‐exporters.