Séminaire du LEDi – Communication d’Ivan Ledezma

Ivan Ledezma, Professeur ( LEDi ), présentera l’article co-écrit avec Maria Bas ( CEPII)
“Trade Liberalisation and Heterogeneous Technology Investments”

Lundi 1er décembre 2014
de 15h à 17h00
salle des séminaires ( MSH )

This paper proposes an intra-industry trade model with heterogeneous firms that incorporates a productivity-enhancing endogenous sunk investment. Closed-form solutions for the general equilibrium open economy show that trade liberalisation has two opposite effects on firm-level investment and productivity. Freer trade, by raising export profits, increases the incentives to invest in technology. It also dampens them, however, as profits stemming from domestic sales are reduced. Only exporters benefit from the former positive effect. Further analysis reveals that the shape of the distribution of initial efficiency draws, the level of trade costs and the technology intensity of the industry are key in removing the ambiguities regarding the net impact of trade liberalisation. We discuss recent empirical evidence supporting the main mechanisms of the model.

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