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Firm heterogeneity and costly trade: A new estimation strategy and policy experiments

Cherkashin, Ivan; Demidova, Svetlana; Looi Kee, Hiau; Krishna, Kala


We build a tractable partial equilibrium model in the spirit of Melitz (2003) to help understand the role of trade preferences given to developing countries, as well as the efficacy of various subsidy policies. The model allows for firm level heterogeneity in both demand and productivity and lets the mass of firms that enter be endogenous.Trade preferences given by one country have positive spillovers on exports to others in this model. Preferences given by the EU to Bangladesh in an industry...[Show more]

CollectionsANU Research Publications
Date published: 2015
Type: Journal article
Source: Journal of International Economics
DOI: 10.1016/j.jinteco.2014.12.007


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