The Choice of Technology and International Trade

Gong, Binglin and Zhou, Haiwen (2023): The Choice of Technology and International Trade.

Abstract

We study the impact of international trade on a firm’s technology choice in an infinite-horizon model. Banks engage in oligopolistic competition in providing capital for the manufacturing sector. Manufacturing firms also engage in oligopolistic competition and choose technologies with different levels of fixed and marginal costs. In the steady state, firms in a country with a larger market size or a more efficient financial sector choose more advanced technologies, and this country has a higher capital stock. The opening of international trade leads manufacturing firms to choose more advanced technologies and the steady-state capital stock increases.

• Item Type: MPRA Paper
• Language: English
• Keywords: International trade, technology choice, financial development, infinite-horizon model, two-stage oligopoly
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies ; Fragmentation; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization ; Manufacturing and Service Industries ; Choice of Technology

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