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Firm heterogeneity, country-level asymmetry and the structure of the gains from trade

Abstract : The main objective of this dissertation is to address three questions, which despite their theoretical appeal, received little attention in existing theoretical work in international trade, and are thus still open. The goal of this dissertation is thus threefold. The first consists in studying the welfare implications of standards liberalization under country-level asymmetry both in market size and stringency of local standards. The second is to examine both theoretically and empirically the income effect on trade margins and on the degree of their sensitivity to trade costs. The third objective is to concentrate on the firm-specific aspect of the demand elasticity beyond the CES, and to examine the role it plays in determining the magnitude and the structure of the gains from trade. Towards this goal, I embed alternative assumptions on both the demand and supply side in the canonical Melitz-Chaney model of international trade with heterogeneous firms (Melitz, 2003; Chaney, 2008). ln so doing, the current dissertation contributes to trade theory with heterogeneous firms along three lines. ln Chapter 1, I show that standards liberalization is welfare improving only when the cost hierarchy is "verti-zontal" and the trading partner is larger than the excluded country. ln Chapter 2, I show that the intensive margin of trade increases only with per-capita income in general equilibrium, and that per-capita income dampens the sensitivity of trade margins to trade costs. ln Chapter3, I demonstrate that demand curvature plays a crucial role in determining the structure and the magnitude of the gains from trade, whereas the type of preferences affects only marginally these results.
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Submitted on : Saturday, January 23, 2021 - 12:20:21 PM
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Badis Tabarki. Firm heterogeneity, country-level asymmetry and the structure of the gains from trade. Economics and Finance. Université Panthéon-Sorbonne - Paris I, 2020. English. ⟨NNT : 2020PA01E022⟩. ⟨tel-03119251⟩

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