Harmful Pro-Competitive Effects of Trade in Presence of Credit Market Frictions
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Abstract:
We explore the consequences of international trade in an economy that encompasses technology choice and an endogenous distribution of mark-ups due to credit market frictions. We show that in such an environment a gradual opening of trade may .but not necessarily must .have a negative impact on productivity and overall output. The reason is that the pro-competitive effects of trade reduce mark-ups and hence make access to credit more difficult for smaller firms. As a result, smaller firms while not driven out of the market may be forced to switch to less productive technologies.
Date: 30 January 2018, 14:30 (Tuesday, 3rd week, Hilary 2018)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room A
Speaker: Reto Foellmi (University of St.Gallen)
Organising department: Department of Economics
Part of: International Trade Seminar
Booking required?: Not required
Audience: Members of the University only
Editors: Erin Saunders, Anne Pouliquen