DP14133 IO for Export(s)
|Author(s):||Monika Mrázová, J Peter Neary|
|Publication Date:||November 2019|
|Keyword(s):||Heterogeneous Firms, Pass-Through, Quantifying Effects of Globalization, Super- and Sub-Convexity, Supermodularity|
|JEL(s):||F12, F23, L11|
|Programme Areas:||International Trade and Regional Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=14133|
We provide an overview and synthesis of recent work on models of monopolistic competition with heterogeneous firms in international trade, paying particular attention to competition effects, pass-through, selection effects, and linking distributions of firm characteristics and outcomes. A recurring theme is that CES preferences are extremely convenient for deriving analytic results, but also extremely restrictive in their theoretical 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.