IO for export(s)

Working paper

We provide an overview and synthesis of recent work on models of monopolistic competition with heterogeneous firms in international trade, paying particular atten¬tion to pass-through, selection effects, competition effects, and matching endogenous with exogenous distributions. A recurring theme is that CES preferences are extremely convenient for deriving analytic results, but also extremely restrictive in their theoret-ical and empirical implications. We introduce the class of "constant-response demand functions" to describe some related families of demand functions that provide a unifying principle for much recent work that explores alternatives to CES demands.

Authors: Neary, P; Mrázová, M

• Publication status: Published
• Publisher: University of Oxford
• Series: Department of Economics Discussion Paper Series
• Publication date: 2019-02-08
• Paper number: 868
• Keywords: quantifying effects of globalization; super- and sub-convexity; supermodularity; heterogeneous firms; pass-through