Innovation and trade with heterogeneous firms

Ngo Long, Horst Raff and Frank Stähler

Journal of International Economics, 2011, vol. 84, issue 2, 149-159

Abstract: This paper examines how trade liberalization affects the innovation incentives of firms, and what this implies for industry productivity. For this purpose we develop a reciprocal dumping model of international trade with heterogeneous firms and endogenous R&D. Among the robust results that hold both in the short run when there is no entry, and in the long run under free entry are that trade liberalization increases aggregate R&D when trade costs are low and decreases R&D when trade costs are high. Expected industry productivity rises as trade costs fall.

Keywords: International; trade; Firm; heterogeneity; R&D; Productivity; Market; structure (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (71)

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Related works:
Working Paper: Innovation and Trade with Heterogeneous Firms (2009)
Working Paper: Innovation and Trade with Heterogeneous Firms (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:84:y:2011:i:2:p:149-159

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