TY  - JOUR
AU  - Bernard,Andrew B.
AU  - Jensen,J. Bradford
AU  - Schott,Peter K.
TI  - Falling Trade Costs, Heterogeneous Firms, and Industry Dynamics
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9639
PY  - 2003
Y2  - April 2003
UR  - http://www.nber.org/papers/w9639
L1  - http://www.nber.org/papers/w9639.pdf
N1  - Author contact info:
Andrew Bernard
Tuck School of Business at Dartmouth
100 Tuck Hall
Hanover, NH  03755
Tel: 603/646-0302
Fax: 603/646-0995
E-Mail: Andrew.B.Bernard@dartmouth.edu

J. Bradford Jensen
McDonough School of Business
Georgetown University
Washington, DC 20057
Tel: 202/687-3767
E-Mail: jbj24@georgetown.edu

Peter Schott
Yale School of Management
135 Prospect Street
New Haven, CT 06520-8200
Tel: 203/436-4260
Fax: 203/432-6974
E-Mail: peter.schott@yale.edu
AB  - This paper examines the response of industries and firms to changes in trade costs. Several new firm-level models of international trade with heterogeneous firms predict that industry productivity will rise as trade costs fall due to the reallocation of activity across plants within an industry. Using disaggregated U.S. import data, we create a new measure of trade costs over time and industries. As the models predict, productivity growth is faster in industries with falling trade costs. We also find evidence supporting the major hypotheses of the heterogenous-firm models. Plants in industries with falling trade costs are more likely to die or become exporters. Existing exporters increase their shipments abroad. The results do not apply equally across all sectors but are strongest for industries most likely to be producing horizontally-differentiated tradeable goods.
ER  -