Shintaku, Koji (2015): Decision on the number of export markets firms enter and the optimal division of labor within firms.
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Abstract
By constructing an intra-industry trade model with the division of labor within firms, this study shows that trade improves firm productivity through promoting the division of labor. The division of labor is limited not by the size of each market but by the number of export markets that firms enter. Reallocation of labor across firms based on free-entry condition, fixed export costs, and constant markup rate plays a key role behind this result. Firms enter the export markets in the ascending order of entry costs. As trade costs decrease, firms enter more export markets if the number of markets does not reach the upper bound. Hence, the division of labor is essentially limited by trade costs. This implication brings new insight to Adam Smith's theorem.
Item Type: | MPRA Paper |
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Original Title: | Decision on the number of export markets firms enter and the optimal division of labor within firms |
Language: | English |
Keywords: | the number of export markets that firms enter; division of labor within firms; labor reallocation |
Subjects: | F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies ; Fragmentation |
Item ID: | 62623 |
Depositing User: | Koji Shintaku |
Date Deposited: | 07 Mar 2015 18:34 |
Last Modified: | 28 Sep 2019 12:33 |
References: | Chaney, T., and R. Ossa. (2013). ``Market Size, Division of Labor, and Firm Productivity.'' Journal of International Economics, 90(1): 177-180. Francois, J.F. (1987). ``Trade in producer services and returns due to specialization under monopolistic competition." Canadian Journal of Economics, 23(1): 109-124. Kamei, K. (2013). ``Trade Liberalization, Division of Labor, and Firm productivity." MPRA Paper No. 50301. Krugman, P. R. (1979). ``Increasing Returns, Monopolistic Competition, and International Trade." Journal of Internaional Economics 9(4): 469-479. Krugman, P. R. (1980). ``Scale Economies, Product Differentiation, and the Pattern of Trade." American Economic Review, 70(5): 950-959. Melitz, M. J. (2003). ``The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity." Econometrica 71(6): 1695-1725. Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. Volume 1. London, UK: Strahan and Cadell. Zadeh, S. A. M. (2013). ``Labor Specialization and the Impact of International Trade on the Skill Premium." Job Market Paper. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/62623 |
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Decision on the number of export markets firms enter and the optimal division of labor within firms. (deposited 28 Feb 2015 08:58)
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