New Trade Models, New Welfare Implications

DSpace/Manakin Repository

New Trade Models, New Welfare Implications

Citable link to this page


Title: New Trade Models, New Welfare Implications
Author: Melitz, Marc J.; Redding, Stephen J.

Note: Order does not necessarily reflect citation order of authors.

Citation: Melitz, Marc J., and Stephen J. Redding. 2015. “New Trade Models, New Welfare Implications.” American Economic Review 105 (3) (March): 1105–1146. doi:10.1257/aer.20130351.
Full Text & Related Files:
Abstract: We show that endogenous firm selection provides a new welfare margin for heterogeneous firm models of trade (relative to homogeneous firm models). Under some parameter restrictions, the trade elasticity is constant and is a sufficient statistic for welfare, along with the domestic trade share. However, even small deviations from these restrictions imply that trade elasticities are variable and differ across markets and levels of trade costs. In this more general setting, the domestic trade share and endogenous trade elasticity are no longer sufficient statistics for welfare. Additional empirically observable moments of the micro structure also matter for welfare.
Published Version: doi:10.1257/aer.20130351
Other Sources:
Terms of Use: This article is made available under the terms and conditions applicable to Open Access Policy Articles, as set forth at
Citable link to this page:
Downloads of this work:

Show full Dublin Core record

This item appears in the following Collection(s)


Search DASH

Advanced Search