Sectoral structure, heterogeneous plants, and international trade

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

I examine the impact of trade policy on manufacturing plant behavior by developing a methodology that addresses both plant heterogeneity and intersectoral resource reallocation. A plant-level microsimulation based upon the industry structure of Bernard et al. (2003) is linked to a multi-sector computable general equilibrium model. This linkage permits an analysis of plant-level behavior that encompasses the trade-induced changes in factor prices and consumption patterns. The methodology is applied in the examination of two counterfactual trade policy scenarios on the Chilean manufacturing sector. The results suggest that trade liberalization leads to a reallocation of output toward the most productive producers. This result is driven by two primary causes: (a) a reduction in the price of inputs that promotes the expansion of output by the most productive producers and (b) increased competition from overseas that drives the least productive producers out of the market.

Original languageEnglish
Pages (from-to)1967-1976
Number of pages10
JournalEconomic Modelling
Volume28
Issue number4
DOIs
StatePublished - Jul 2011
Externally publishedYes

Fingerprint

International trade
Methodology
Reallocation
Trade policy
Microsimulation
Manufacturing sector
Manufacturing
Computable general equilibrium model
Linkage
Scenarios
Trade liberalization
Consumption patterns
Industry structure
Resources
Factor prices

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Cite this

Sectoral structure, heterogeneous plants, and international trade. / Braymen, Charles B.

In: Economic Modelling, Vol. 28, No. 4, 07.2011, p. 1967-1976.

Research output: Contribution to journalArticle

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