Market size, structure, and access: Trade with capacity constraints
Anson Soderbery ()
European Economic Review, 2014, vol. 70, issue C, 276-298
This paper develops a model of international trade where firms are heterogeneous across capacity and productivity. A binding capacity constraint induces firms to raise prices in order to take advantage of access to new markets. This generates markets with a flexible competitive structure giving rise to instances where trade and trade liberalization negatively impact welfare. Its key predictions can be identified by observing the presence of small yet highly productive firms and substitution by firms across markets as accessibility evolves. Using Thai firm-level data I establish the prevalence of these anomalous firms and demonstrate they face capacity constraints.
Keywords: Trade; Heterogeneous firms; Capacity constraints; Market access (search for similar items in EconPapers)
JEL-codes: F12 F13 L11 L13 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:70:y:2014:i:c:p:276-298
Access Statistics for this article
European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer
More articles in European Economic Review from Elsevier
Bibliographic data for series maintained by Haili He ().