Harmful Procompetitive Effects of Trade in Presence of Credit Market Frictions

Reto Foellmi and Manuel Oechslin

Journal of Money, Credit and Banking, 2020, vol. 52, issue 6, 1493-1525

Abstract: We explore the consequences of international trade in an economy that encompasses technology choice and an endogenous distribution of mark‐ups due to credit market frictions. We show that in such an environment a gradual opening of trade may—but not necessarily must—have a negative impact on productivity and overall output. The reason is that the procompetitive effects of trade reduce mark‐ups and hence make access to credit more difficult for smaller firms. As a result, smaller firms—while not driven out of the market—may be forced to switch to less productive technologies.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1111/jmcb.12634

Related works:
Working Paper: Harmful Pro-Competitive Effects of Trade in Presence of Credit Market Frictions (2019)
Working Paper: Harmful Pro-Competitive Effects of Trade in Presence of Credit Market Frictions (2019)
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:wly:jmoncb:v:52:y:2020:i:6:p:1493-1525

Access Statistics for this article

Journal of Money, Credit and Banking is currently edited by Robert deYoung, Paul Evans, Pok-Sang Lam and Kenneth D. West

More articles in Journal of Money, Credit and Banking from Blackwell Publishing
Bibliographic data for series maintained by Wiley Content Delivery ().