International trade with heterogeneous firms: An interactive classroom simulation

Nathaniel Cook and Angie Pantuosco

The Journal of Economic Education, 2022, vol. 53, issue 1, 31-42

Abstract: In this article, the authors describe an interactive classroom simulation that helps students learn some of the most important ideas from models of international trade with heterogeneous firms. Students make entry/exit decisions for individual firms with different marginal costs of production. The simulation consists of five rounds, beginning with autarky and progressively liberalizing trade. In each round, students interactively determine each firm’s equilibrium entry/exit decision by responding in real time to how their individual firm’s profit is affected by the decisions of all of the other firms. Empirical evidence from a pre–post assessment of students who participated in the simulation in the fall of 2019 demonstrates a significant increase in student understanding of international trade with heterogeneous firms after participating in the simulation.

Date: 2022
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DOI: 10.1080/00220485.2021.2004275

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