Authors:

  • Marc Melitz

Excerpt

New Trade Models, New Welfare Implications. Marc Melitz, August 13, 2014, Paper. "We show that endogenous firm selection provides a new welfare margin for heterogeneous firm models of trade (relative to homogeneous firm models). Under some parameter restrictions, the trade elasticity is constant and is a sufficient statistic for welfare, along with the domestic trade share. However, even small deviations from these restrictions imply that trade elasticities are variable and differ across markets and levels of trade costs..." Link