Multiproduct firms and trade liberalization

Andrew B. Bernard, Stephen J. Redding, Peter K. Schott

Research output: Contribution to journalArticlepeer-review

422 Scopus citations

Abstract

This article develops a general equilibrium model of multiple-product, multiple-destination firms, which allows for heterogeneity in ability across firms and in product attributes within firms. Firms make endogenous entry and exit decisions and each surviving firm chooses optimally the range of products to supply to each market. We show that the resulting selection, across and within firms, provides a natural explanation for a number of features of trade across firms, products, and countries. Using both time-series changes in trade policy and cross-section variation in trade, we provide empirical evidence in support of the predictions of the model.

Original languageEnglish (US)
Pages (from-to)1271-1318
Number of pages48
JournalQuarterly Journal of Economics
Volume126
Issue number3
DOIs
StatePublished - Aug 1 2011

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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