TY  - JOUR
AU  - Baldwin,Richard
TI  - Heterogeneous Firms and Trade: Testable and Untestable Properties of the Melitz Model
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11471
PY  - 2005
Y2  - July 2005
UR  - http://www.nber.org/papers/w11471
L1  - http://www.nber.org/papers/w11471.pdf
N1  - Author contact info:
Richard Baldwin
Cigale 2
1010 Lausanne
SWITZERLAND
Tel: 41-22-908-5900
E-Mail: rbaldwin@cepr.org
M2  - featured in NBER digest on 2005-07-04
AB  - This paper sets out a basic heterogeneous-firms trade model that is closely akin to Melitz (2003). The positive and normative properties of the model are studied in a manner intended to highlight the core economic logic of the model. The paper also studies the impact of greater openness at the firm-level and aggregate level, focusing on changes in the number and type of firms, trade volumes and prices, and productivity effects. The normative effects of liberalisation are also studied and here the paper focuses on aggregate gains from trade, and income redistribution effects, showing inter alia that the model is marked by a Stolper-Samuelson like effect. A number of empirically testable hypotheses are also developed. These concern the impact of greater openness on the firm-level trade pattern, the variance of unit-prices, the stock market valuation of firms according to size, and the lobbying behaviour by size.
ER  -