Country Size, Trade, and Productivity: An Analysis of Heterogenous Firms and Differential Beachhead Costs

Anders Akerman () and Rikard Forslid ()
Additional contact information
Rikard Forslid: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden, http://people.su.se/~forsl/

No 2007:14, Research Papers in Economics from Stockholm University, Department of Economics

Abstract: This paper modifies the heterogenous firms and trade model by Melitz (2003) by explicitly modelling the beachhead cost of a firm in a new market as a function of market size. This leads to several new predictions compared to the standard model. In particular, the productivity of non exporters and exporters depends on market size. Moreover, manufacturing export shares vary inversely with market size. However, export shares converge (upwards) as markets are integrated. The empirical part of the paper offers support for our model specification.

Keywords: Heterogenous Firms; Market Size; Beachhead Costs (search for similar items in EconPapers)
JEL-codes: H32 P16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff and nep-int
Date: 2007-07-30

Downloads: (external link)
http://www.ne.su.se/paper/wp07_14.pdf (application/pdf)

Related works:
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:hhs:sunrpe:2007_0014

Access Statistics for this paper

More papers in Research Papers in Economics from Stockholm University, Department of Economics
Address: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden
Contact information at EDIRC.
Series data maintained by Sten Nyberg ().