Do trade policy differences induce sorting? Theory and evidence from Bangladeshi apparel exporters

Svetlana Demidova, Hiau Looi Kee () and Kala Krishna ()

Journal of International Economics, 2012, vol. 87, issue 2, 247-261

Abstract: This paper provides a new heterogeneous firm model for trade where firms differ in their productivity and experience different market demand shocks. The model incorporates the variations in trade policy, trade preferences, and the rules of origin needed to obtain them that are faced by Bangladeshi garment exporters to the US and EU. We estimate firm's productivity using an extension of the Olley Pakes procedure that accounts for the biases arising from both demand shocks and productivity being unobserved. Predictions of the model are then tested non-parametrically and are shown to be supported empirically.

Keywords: Rules of origin; Firm heterogeneity; Demand shocks (search for similar items in EconPapers)
JEL-codes: F12 F13 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (36)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022199611001723
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Do Trade Policy Differences Induce Sorting? Theory and Evidence from Bangladeshi Apparel Exporters (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:87:y:2012:i:2:p:247-261

DOI: 10.1016/j.jinteco.2011.12.008

Access Statistics for this article

Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and Rodríguez-Clare, Andrés

More articles in Journal of International Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().