Endogenous asymmetries in technology adoption and international trade.

Abstract

This note explores the interaction between trade integration and asymmetric choices of technology adoption. It seeks to bring micro foundations of Örm heterogeneity into an open-economy model. By so doing, the analysis shows the complementarity between an imperfect competition framework of strategic substitutability and a system of preferences specially well suited for general equilibrium analysis. Preliminary results, still in partial equilibrium, conÖrm standard claims on price reduction and the ability of economies of scale to facilitate technology adoption. More interesting, the number of active Örms is reduced by the increase in market size and subtile interactions arises from demand aggregation.Trade integration; Open-economy; Technological Change; general equilibrium analysis;