Openness to Trade and Industry Cost Dispersion: Evidence from a Panel of Italian Firms

Marcello Pagnini (), Gianmarco Ottaviano and Massimo Del Gatto

No 6336, CEPR Discussion Papers from Centre for Economic Policy Research

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; Firm selection; Firm-level data; Openness to trade; Total factor productivity (search for similar items in EconPapers)
JEL-codes: F12 F15 R13 (search for similar items in EconPapers)
Date: 2007-06
New Economics Papers: this item is included in nep-bec, nep-com, nep-eff and nep-int
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: OPENNESS TO TRADE AND INDUSTRY COST DISPERSION: EVIDENCE FROM A PANEL OF ITALIAN FIRMS* (2008)
Working Paper: Openess to trade and industry cost dispersion: Evidence from a panel of Italian firms (2007)
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