The simple analytics of the Melitz model in a small economy

• 成果类型: Article
• 署名作者: Demidova, Svetlana; Rodriguez-Clare, Andres
• 署名单位: McMaster University; University of California System; University of California Berkeley; National Bureau of Economic Research
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2013.02.006
• 发表日期: 2013
• 页码: 266-272
• 关键词: Firm heterogeneity; Small economy; trade liberalization

摘要

In this paper we present a version of the Melitz (2003) model for the case of a small economy and summarize its key relationships with the aid of a simple figure. We then use this figure to provide an intuitive analysis of the implications of asymmetric changes in trade barriers and show that a decline in import costs always benefits the liberalizing country. This stands in contrast to variants of the Melitz model with a freely traded (outside) sector, such as Demidova (2008) and Melitz and Ottaviano (2008), where the country that reduces importing trade costs experiences a decline in welfare. (C) 2013 Elsevier B.V. All rights reserved.