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Discussion Paper Details

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Title: Openness to Trade and Industry Cost Dispersion: Evidence from a Panel of Italian Firms

Author(s): Massimo Del Gatto, Gianmarco Ottaviano and Marcello Pagnini

Publication Date: June 2007

Keyword(s): Cost dispersion, firm selection, firm-level data, openness to trade and total factor productivity

Programme Area(s): International Trade and Regional Economics

Abstract: We use Italian firm-level data to investigate the impact of trade openness on the distribution of firms across marginal cost levels. In so doing, we implement a procedure that allows us to control not only for the standard transmission bias identified in firm-level TFP regressions but also for the omitted price bias due to imperfect competition. We find that more open industries are characterized by a smaller dispersion of costs across active firms. Moreover, in those industries the average cost is also smaller.

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Bibliographic Reference

Del Gatto, M, Ottaviano, G and Pagnini, M. 2007. 'Openness to Trade and Industry Cost Dispersion: Evidence from a Panel of Italian Firms'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6336