Work

Zeros, Quality and Space: Trade Theory and Trade Evidence

Year: 2007

Type: article

Abstract: Bilateral, product-level data exhibit a number of strong patterns that can be used to evaluate international trade theories, notably the spatial incidence of "export zeros" (correlated with distance and importer size), and of export unit values (positively related to distance).We show that leading theoretical trade models fail to explain at least some of these facts, and propose a variant of the Melitz model that can account for all the facts.In our model, high quality firms are the most competitive, with heterogeneous quality increasing with firms' heterogeneous cost.

Source: American Economic Journal Microeconomics

DOI: 10.1257/mic.3.2.60

Authors: Richard Baldwin, James Harrigan

Institutions: University of Geneva, National Bureau of Economic Research, Centre for Economic Policy Research, Graduate Institute of International Studies, Graduate Institute of International and Development Studies, University of Virginia

Language: English

Topic: Global trade and economics

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2123516271

FWCI: 59.17

Cites: 69

Cited by: 820

Related to: 7