Home market effect, regulation costs and heterogeneous firms

This paper studies how market-specific entry sunk costs (regulation costs) affect the Home Market Effect (HME) with firm heterogeneity in marginal costs. our model is based on the Dixit-Stiglitz monopolistic competition model with firm heterogeneity plus regulation costs difference. We find that a regulation costs gap works as dispersion force by inducing a market potential gap, which reduces the HME and could cause the reverse HME or the anti-HME. The HME first rises and then fall in terms of trade openness, whereas the HME rises in terms of regulation costs gap coordination by technical barriers to trade (TBT) agreements. Firm heterogeneity dampens the dispersion force by the regulation costs difference and thus works as an agglomeration force. Firm heterogeneity causes a perfect spatial sorting, in which a large country attracts only high productivity firms, and vice versa.Home market effect, firm heterogeneity, regulation costs, technical barriers to trade.

Home Market Effect and Regulation Costs - Homogeneous Firm and Heterogeneous Firm Trade Models

This paper studies how market-specific entry sunk costs (regulation costs) affect the Home Market Effect (HME) with firm marginal costs heterogeneity. Our model is based on the Dixit-Stiglitz monopolistic competition model with firm heterogeneity plus regulation costs difference. We find that a regulation costs gap works as dispersion force by inducing a market potential gap, which reduces the HME and could cause the reverse HME or the anti-HME. The Home Market Magnification Effect (HMME) in terms of trade openness is hump-shaped, whereas the pro-HMME in terms of regulation costs coordination by technical barriers to trade (TBT) agreements can be found. Firm heterogeneity dampens the dispersion force by the regulation costs difference and thus works as an agglomeration force. Firm heterogeneity causes a perfect spatial sorting, in which a large country attracts only high productivity firms and vice versa.regulation costs, market potential, perfect spatial sorting, home market effect, home market magnification effect, firm heterogeneity, technical barriers to trade

Trade Liberalization, Offshoring and Firm Heterogeneity

This paper analyses the impact of trade liberalization in a model where heterogeneous firms can freely offshore their production. Firms choose whether to produce, and if so whether to sell on the domestic market only or on the export market as well. Simultaneously, they also choose where to locate their production. The paper shows that the interaction between heterogeneity in firm productivity and the possibility of offshoring production dramatically alters the impact of trade liberalization. Three main results emerge from this interaction: i) Intra-industry factor reallocation towards the most productive firms, which is induced by trade liberalization, operates at the world level, but not necessarily at the country level and thus trade liberalization can lead to average productivity losses in some countries; ii) Trade liberalization may reverse country specialization independently of any country size effect; iii) The relation between trade liberalization and trade growth is non-linear, even in the absence of trade in intermediate goods.Trade Liberalization, Offshoring, Firm Heterogeneity, Trade Patterns, Average Productivity

Home market effect, regulation costs and heterogeneous firms

URL des Cahiers : https://halshs.archives-ouvertes.fr/CAHIERS-MSECahiers de la Maison des Sciences Economiques 2006.56 - ISSN 1624-0340This paper studies how market-specific entry sunk costs (regulation costs) affect the Home Market Effect (HME) with firm heterogeneity in marginal costs. our model is based on the Dixit-Stiglitz monopolistic competition model with firm heterogeneity plus regulation costs difference. We find that a regulation costs gap works as dispersion force by inducing a market potential gap, which reduces the HME and could cause the reverse HME or the anti-HME. The HME first rises and then fall in terms of trade openness, whereas the HME rises in terms of regulation costs gap coordination by technical barriers to trade (TBT) agreements. Firm heterogeneity dampens the dispersion force by the regulation costs difference and thus works as an agglomeration force. Firm heterogeneity causes a perfect spatial sorting, in which a large country attracts only high productivity firms, and vice versa.Ce papier étudie comment des coûts d'entrée (coûts de régulation), spécifiques à chaque marché, amendent le «Home Market Effect» (HME) en présence de firmes hétérogènes en terme de coûts marginaux. Nous trouvons que l'hétérogénéité des firmes crée une nouvelle force d'agglomération. Cette hétérogénéité implique un classement spatial des firmes en fonction de leur productivité, le grand pays attirant les firmes les plus productives. D'autre part, la différence de coûts de régulation entre pays induit une force de dispersion des activités, ce qui réduit l'effet HME. Nous trouvons alors qu'une libéralisation du commerce renforce puis réduit le HME. De plus, une réduction des barrières non tarifaires augmente le HME, renforçant donc les inégalités entre pays

Demand learning and firm dynamics: evidence from exporters

This paper provides direct evidence that learning about demand is an important driver of firms' dynamics. We present a model of Bayesian learning in which firms are uncertain about their idiosyncratic demand in each of the markets they serve, and update their beliefs as noisy information arrives. Firms are predicted to update more their beliefs to a given demand shock, the younger they are. We test and empirically confirm this prediction, using the structure of the model together with exporter-level data to identify idiosyncratic demand shocks and the firms' beliefs about future demand. Consistent with the theory, we also find that the learning process is weaker in more uncertain environments

Protection without Discrimination

This paper shows that domestic regulations may fully respect the non-discrimination principle of the WTO and still act as a protectionist device. The core mechanism is a profit shifting effect between firms within sectors. By increasing production costs of all operating firms in a market, domestic regulations force the least efficient firms to exit, increasing market shares of surviving firms. This generates protectionism in the aggregate if it forces relatively more foreign firms to exit, or if domestic firms are relatively more efficient. Introducing political economy motives in the model, this paper shows that trade liberalization increases the use of domestic regulations in the non-cooperative equilibrium, because it improves their protectionist effect. Moreover, a trade agreement may be welfare reducing if governments only care about the most efficient firms. If thefirm productivity distribution differs across countries, the low productivity country cannot retaliate to a non-discriminatory protectionist policy from the high productivity country. In this context, a Pareto improving trade agreement requires an international income redistribution between countries, which is at odds with the principle of reciprocity in trade negotiations. These results may help explaining why recent trade negotiations are proven difficult and face increasing opposition

Olry-Louis, I. & Arnoux-Nicolas, C. (2022). Le sens des transitions et des bifurcations professionnelles.

La question des réorientations des parcours touche un grand nombre de personnes et est devenue une réalité incontournable de notre époque. Ces changements peuvent être considérés comme une opportunité pour se réinventer et changer de vie, mais ils peuvent également générer des doutes, des craintes et des difficultés. Ce sont des moments charnières compliqués pour l’individu qui impliquent des remaniements identitaires mais aident également à la construction du sens. Aborder le sens dans les t..

ÉQUILIBRE ET POSSIBILITÉ DE CRISES DANS LE MODÈLE DE REPRODUCTION ÉLARGIE DE MARX

In the numerical examples used by Marx to study the reproduction of social capital, the economy reaches a steady growth path in only two periods. This surprising outcome has been interpreted by Marx‟s readers as a property of a model which excludes any sort of economic crisis. This paper shows that this is not the case. Depending on the proportion between sectors and on the accumulation rate in the sector producing the means of production, two kinds of crises can occur. Following a suggestion of Marx, we emphasize the analysis of the physical conditions of reproduction and, on such a basis, we determine the critical proportions beyond which a crisis occurs. If, as in Marx, commodities are exchanged at their labor value, the critical proportions will be changedDans les exemples numériques que Marx utilise pour étudier la reproduction du capital social, l‟économie atteint, dès la seconde période, un régime de croissance régulière. Ce résultat a surpris les lecteurs de Marx qui l‟ont interprété comme la propriété d‟un modèle qui exclut toute crise. On montre ici qu‟il n‟en est rien. Nous avons identifié deux formes de crise dont l‟occurrence dépend de la proportion entre les secteurs et du taux d‟accumulation du secteur qui produit les moyens de production. Suivant une suggestion de Marx, nous accordons une attention particulière à l‟analyse des conditions physiques de la reproduction, même si son schéma ne connaît que des quantités monétaires. Sur cette base, nous déterminons les proportions critiques au-delà desquelles une crise se produira. On montre que si, comme Marx l‟admet, les marchandises s‟échangent à leur valeur, les proportions critiques seront modifiées

Exporter dynamics and investment under uncertainty

Abstract This paper studies the way in which the dynamics of exports affect investment at the firm-level. We first develop a simple model to study the investment behavior of firms when both domestic and export sales are uncertain. Two main testable predictions emerge: (i) if foreign markets are inherently more uncertain than the domestic market -due for instance to longer time-to-ship, exchange rate volatility or trade policy -investment should be less responsive to export sales than domestic sales; (ii) if experience in the export market reduces uncertainty about future sales, positive shocks affecting exports may trigger more investment some time after entry. These predictions are supported on a panel of French firms over the period 1986-2001. We also find that exporting experience and uncertainty interact with each other: experience matters more for the most volatile markets, and uncertainty matters more at low levels of experience. In general, these results can be interpreted as evidence supporting the presence of a strong uncertainty associated with entry into foreign markets that eventually vanishes as exporters gain experience on this market

Monetary objectivity and physical objectivity in Marx's reproduction model

Marx étudie la reproduction élargie du capital social à l'aide d'exemples numériques. Ses schémas décrivent la reproduction de flux monétaires. Seuls sont connus les produits des quantités par les valeurs unitaires : valeurs du produit brut, de la masse salariale et du capital constant dans les deux secteurs. On montre que, si Marx part exclusivement de données de la circulation monétaire qui ne permettent de calculer ni les quantités relatives de biens produits et utilisés par les secteurs, ni leur valeur relative, son schéma fournit tous les éléments d'une étude des conditions physiques de la reproduction.Marx, reproduction, accumulation, crise