The spatial selection of heterogeneous firms

Toshihiro Okubo (), Pierre M. Picard () and Jacques-François Thisse

Journal of International Economics, 2010, vol. 82, issue 2, pages 230-237

Abstract: We show that heterogeneous firms choose different locations in response to market integration. Specifically, decreasing trade costs lead to the gradual agglomeration of efficient firms in the larger country where they have access to a bigger pool of consumers. In contrast, high-cost firms seek protection against competition from efficient firms by locating in the smaller country. However, when the spatial separation of markets ceases to be a sufficient protection against foreign competition, high-cost firms choose to set up in the larger market. Hence, the relationship between economic integration and international productivity gap first increases and then decreases with market integration.

Keywords: Firm; heterogeneity; Spatial; selection; Trade; liberalization; Economic; geography (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/B6V6D ... cec25a2cd3a8cde23627
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The spatial selection of heterogeneous firms (2010)
Working Paper: The Spatial Selection of Heterogeneous Firms (2008)
Working Paper: The spatial selection of heterogeneous firms (2008)
Working Paper: The spatial selection of heterogeneous firms (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:eee:inecon:v:82:y:2010:i:2:p:230-237

Access Statistics for this article

Journal of International Economics is edited by C. M. Engel and R.W. Staiger

More articles in Journal of International Economics from Elsevier
Series data maintained by Wendy Shamier ().