Journal Article

Innovation and Trade with Heterogeneous Firms

Authors

  • Ngo Van Long
  • Horst Raff
  • Frank Stähler
Publication Date

This paper examines how trade liberalization affects the innovation incentives of firms, and what this implies for industry productivity. For this purpose we develop a reciprocal dumping model of international trade with heterogeneous firms and endogenous R&D. Among the robust results that hold both in the short run when there is no entry, and in the long run under free entry are that trade liberalization increases aggregate R&D when trade costs are low and decreases R&D when trade costs are high. Expected industry productivity rises as trade costs fall.

Info

JEL Classification
F12, F13
DOI
10.1016/j.jinteco.2011.03.008

Key Words

  • firm heterogeneity
  • international trade
  • Internationaler Handel
  • market structure
  • productivity
  • Produktivität
  • R&D