Department of Economics and Business Economics

Asymmetric Monotone Comparative Statics for the Industry Compositions

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DOI

Within a standard model of international trade with heterogenous firms and two asymmetric countries, we derive sufficient conditions for monotone comparative statics (MCS) for the industry composition. This model outcome is defined as first-order stochastic dominance shifts in the equilibrium distributions of all activities across active firms. MCS for the industry composition occurs in a country that experiences a decline in its costs of serving the foreign market and meanwhile experiences an increase in its level of competition. In the other country, the industry-level implications are exactly opposite. These clear industry-level results hold while firms respond asymmetrically to the trade shock.

Original languageEnglish
JournalReview of International Economics
Volume25
Issue2
Pages (from-to)362-382
Number of pages21
ISSN0965-7576
DOIs
Publication statusPublished - May 2017

    Research areas

  • INTERNATIONAL-TRADE, PRODUCTIVITY, FIRMS, IMPACT, TECHNOLOGY, STRATEGY

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