Entry assumptions and welfare gains from trade

Hang T. Nguyen and Olga Timoshenko

Economics Letters, 2017, vol. 159, issue C, 104-107

Abstract: When productivities are not Pareto distributed, welfare gains from trade are not necessarily isomorphic between entry assumptions. Under exogenous entry, the extra adjustment in dividends dampens the relative increase in real wage as trade costs decline, resulting in lower welfare gains than under free entry.

Keywords: Heterogeneous firms trade models; Gains from trade; Exogenous entry; Free entry (search for similar items in EconPapers)
JEL-codes: F1 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:159:y:2017:i:c:p:104-107

DOI: 10.1016/j.econlet.2017.07.009

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