The Interaction Between Technology Adoption and Trade When Firms are Heterogeneous

Bulent Unel ()

Departmental Working Papers from Department of Economics, Louisiana State University

Abstract: This paper develops a monopolistic competition model with heterogeneous firms to study the interaction between technology adoption and trade in a world of two countries facing different technology adoption costs. It shows that a reduction in the technology adoption cost in one country increases the productivity, induces more firms to adopt advanced technology, and improves welfare in this country, while decreasing the pro- ductivity, inducing more firms to switch back to old technology, and reducing welfare in the other country. Furthermore, although a reduction in transport costs always makes the country with lower adoption cost better off, it can hurt the other country.

Date: 2010-03
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Related works:
Journal Article: The Interaction Between Technology Adoption and Trade When Firms are Heterogeneous (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:lsu:lsuwpp:2010-03

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