Two-sided Heterogeneity: New Implications for Input Trade

Tomohiro Ara

No 13, TUPD Discussion Papers from Graduate School of Economics and Management, Tohoku University

Abstract: How different are the impacts of trade cost on trade flows between intermediate goods and final goods? How large are the welfare gains from trade for intermediate goods relative to final goods? To address these questions, we develop a heterogeneous firm model in which selection into exporting and importing play a key role in industry productivity of vertically-related sectors. We show that the impact of trade cost on trade flows is is greater for intermediate goods than for final goods, due to an extra adjustment through the extensive margin. We also find that the impact of trade cost on welfare is greater for intermediate goods than for final goods if and only if the domestic input share is smaller than the domestic output share.

Pages: 37 pages
Date: 2022-02-17
New Economics Papers: this item is included in nep-int
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10097/00134346

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:toh:tupdaa:13

Access Statistics for this paper

More papers in TUPD Discussion Papers from Graduate School of Economics and Management, Tohoku University Contact information at EDIRC.
Bibliographic data for series maintained by Tohoku University Library ().