The Elusive Pro-Competitive Effects of Trade

Costas Arkolakis, Arnaud Costinot, Dave Donaldson and Andres Rodriguez-Clare

No 21370, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the gains from trade liberalization in models with monopolistic competition, firm-level heterogeneity, and variable markups. For a large class of demand functions used in the international macro and trade literature, we derive a parsimonious generalization of the welfare formula in Arkolakis, Costinot, and Rodríguez-Clare (2012). We then use micro-level trade data to quantify the implications of this new formula. Our main finding is that gains from trade liberalization predicted by models with variable markups are slightly lower than those predicted by models with constant markups. In this sense, pro-competitive effects of trade are elusive.

JEL-codes: F1 F12 (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-int
Note: ITI
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Citations: View citations in EconPapers (136)

Published as Costas Arkolakis, Arnaud Costinot, Dave Donaldson, Andrés Rodríguez-Clare; The Elusive Pro-Competitive Effects of Trade, The Review of Economic Studies, , rdx075, https://doi.org/10.1093/restud/rdx075

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Journal Article: The Elusive Pro-Competitive Effects of Trade (2019)
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