Two‐sided heterogeneity: New implications for input trade

• Published in: Review of international economics Vol. 31; no. 3; pp. 1032 - 1067
• Main Author: Ara, Tomohiro
• Format: Journal Article
• Language: English
• Published: Oxford Blackwell Publishing Ltd 01.08.2023
• Subjects: input trade; selection; Selection effects; Trade liberalization; two‐sided heterogeneity; vertical linkages; Welfare

This article develops a heterogeneous firm model to analyze selection effects at different production stages on trade‐induced intra‐industry resource reallocations. Using a two‐country symmetric setting in which both inputs and final goods are costly to trade subject to selection, we show that the t...