Bellone, Flora; Musso, Patrick; Nesta, Lionel; … - Nationalökonomisk Institut, Institut for Økonomi - 2008
In this paper, we test key micro-level theoretical predictions ofMelitz and Ottaviano (MO) (2008), a model of international trade with heterogenous firms and endogenous mark-ups. At the firm-level, the MO model predicts that: 1) firm markups are negatively related to domestic market size; 2)...