Openess to trade and industry cost dispersion: Evidence from a panel of Italian firms

Massimo Del Gatto (), Gianmarco I.P. Ottaviano () and Marcello Pagnini ()

No 635, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research Department

Abstract: We use Italian firm-level data to investigate the impact of trade openness on the distribution of firms across marginal cost levels. In so doing, we implement a procedure that allows us to control not only for the standard transmission bias identified in firm-level TFP regressions but also for the omitted price bias due to imperfect competition. We find that more open industries are characterized by a smaller dispersion of costs across active firms. Moreover, in those industries the average cost is also smaller.

Keywords: Cost dispersion; openness to trade; firm-level data; firm selection; total factor productivity. (search for similar items in EconPapers)
JEL-codes: F12 F15 R13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com, nep-eff and nep-int
Date: 2007-06
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Related works:
Working Paper: Openness to Trade and Industry Cost Dispersion: Evidence from a Panel of Italian Firms (2007)
Journal Article: OPENNESS TO TRADE AND INDUSTRY COST DISPERSION: EVIDENCE FROM A PANEL OF ITALIAN FIRMS (2008)
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