The impact of trade on growth and welfare with heterogeneous firms and rent-sharing

Hiroyuki Nishiyama, Yasuhiro Gintani and Mizuki Tsuboi

International Review of Economics & Finance, 2024, vol. 89, issue PB, 731-742

Abstract: Can trade liberalization jointly lead to an increase in per capita GDP and higher welfare? To answer this question, we develop a tractable dynamic trade model with heterogeneous firms and rent-sharing. Analytically decomposing the impact of trade liberalization on per capita GDP and welfare into three or four forces, we first show that trade liberalization may lead to a decline in per capita GDP and deteriorate welfare. Our simulation then demonstrates that when rent-sharing effects are strong, a response of welfare to trade liberalization can be U-shaped or inverted U-shaped; giving a possible answer NO to our research question.

Keywords: Firm heterogeneity; Growth; Welfare; Rent-sharing; Trade liberalization (search for similar items in EconPapers)
JEL-codes: F12 F16 F43 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1059056023003933
Full text for ScienceDirect subscribers only

Related works:
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:reveco:v:89:y:2024:i:pb:p:731-742

DOI: 10.1016/j.iref.2023.10.023

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

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