Technology choice and international trade

Gabriela Schmidt

No 1600, Kiel Working Papers from Kiel Institute for the World Economy

Abstract: This paper develops two extensions of the dynamic model presented in Melitz (2003). The first extension consists in the introduction of technology choice between three alternative production technologies: L, M and H. L is assumed to be the same as Melitz's single production technology, while M and H are assumed to be superior production technologies, stemming this superiority from the fact these technologies substitute the more primitive capital goods used in technology L with newer, updated versions which embody technological advances, and also from the fact that M and H are more skill-intensive than L. Technologies M and H are equally skill-intensive, but H still is superior to M because it incorporates world-technology-frontier capital goods, while the capital goods used in M are below such frontier. The second extension consists in the introduction of two different exporting profiles: 'Low-Commitment Exporters' - who make the minimum possible investment required to penetrate export markets- and 'High-Commitment Exporters' - who are ready to make additional trade-related investments in order to gain additional export sales.

Keywords: Technology choice; heterogeneous firms; export profiles; embodied technology; resources' redistribution; monopolistic competition (search for similar items in EconPapers)
JEL-codes: O14 O33 (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1600

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