The choice of technology and international trade

Binglin Gong and Haiwen Zhou

The Journal of International Trade & Economic Development, 2023, vol. 32, issue 7, 1035-1057

Abstract: We study the impact of international trade on a firm’s technology choice in an infinite-horizon model. Banks engage in oligopolistic competition in providing capital for the manufacturing sector. Manufacturing firms also engage in oligopolistic competition and choose technologies with different levels of fixed and marginal costs. In the steady state, firms in a country with a larger market size or a more efficient financial sector choose more advanced technologies, and this country has a higher capital stock. The opening of international trade leads manufacturing firms to choose more advanced technologies and the steady-state capital stock increases.

Date: 2023
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Working Paper: The Choice of Technology and International Trade (2023)
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DOI: 10.1080/09638199.2022.2146737

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