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- ISIDORE Id: 10670/1.e1e50f...
- hal: hal-03579844
- doi: 10.1257/aer.98.4.1707
- SCIENCESPO: 2441/6apm7lruv088iagm4rv2c33jtg
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Mots-clés
F - International Economics/F.F1 - Trade/F.F1.F12 - Models of Trade with Imperfect Competition and Scale Economies • Fragmentation F - International Economics/F.F1 - Trade/F.F1.F13 - Trade Policy • International Trade OrganizationsSujets proches
Trade Commercial trade Foreign trade Trade TradeCiter ce document
Thomas Chaney, « Distorted Gravity: The Intensive and Extensive Margins of International Trade », HAL SHS (Sciences de l’Homme et de la Société), ID : 10.1257/aer.98.4.1707
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Résumé
By considering a model with identical firms, Krugman (1980) predicts that a higher elasticity of substitution between goods magnifies the impact of trade barriers on trade flows. In this paper, I introduce firm heterogeneity in a simple model of international trade. I prove that the extensive margin and the intensive margin are affected by the elasticity of substitution in exact opposite directions. When the distribution of productivity across firms is Pareto, the predictions of the Krugman model with representative firms are overturned: the impact of trade barriers on trade flows is dampened by the elasticity of substitution, and not magnified.
