Increasing marginal costs, firm heterogeneity, and the gains from deep international trade agreements

• 成果类型: Article
• 署名作者: Bergstrand, Jeffrey H.; Cray, Stephen R.; Gervais, Antoine
• 署名单位: University of Notre Dame; University of Notre Dame; University of Sherbrooke; Leibniz Association; Ifo Institut
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2023.103774
• 发表日期: 2023
• 关键词: International trade; Deep trade agreements; Melitz models; Increasing marginal costs; Gravity equations

摘要

Two parameters are central to modern quantitative models of trade flows: the elasticity of substitution in consumption (a) and the inverse index of heterogeneity of firms' productivities (0). However, structural parameter estimation using the seminal Feenstra econometric methodology focuses on estimates of only a and a bilateral export-supply elasticity (labeled y). Separately, modern trade agreements are increasingly deep, meaning they reduce fixed trade costs alongside variable trade costs. First, in the spirit of Arkolakis (2010), we extend the Melitz model of trade to allow for increasing marginal market-penetration costs in an empirically tractable manner to help understand the relative impacts on trade, extensive margins, intensive margins, and welfare of reducing fixed trade costs and variable trade costs. Second, we provide a microeconomic foundation for estimating all three parameters using the Feenstra methodology alongside a gravity equation. Third, we demonstrate the importance of increasing marginal costs for shallow and deep trade-agreement liberalizations using two counterfactual exercises.& COPY; 2023 Elsevier B.V. All rights reserved.