Affiliation:
1. Graduate Institute, 132 rue de Lausanne CH-1202 Geneva; Research Associates at the NBER; Research Fellow at the CEPR.
2. Department of Economics, University of Virginia, Charlottesville, VA 22904-4182; Research Associates at the NBER.
Abstract
Bilateral, product-level data exhibit a number of strong patterns that can be used to evaluate international trade theories, notably the spatial incidence of “export zeros” (correlated with distance and importer size), and of export unit values (positively related to distance). We show that leading theoretical trade models fail to explain at least some of these facts, and propose a variant of the Melitz model that can account for all the facts. In our model, high quality firms are the most competitive, with heterogeneous quality increasing with firms' heterogeneous cost. (JEL F11, F14, F40)
Publisher
American Economic Association
Subject
General Economics, Econometrics and Finance
Cited by
371 articles.
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