Atkeson, Andrew; Burstein, Ariel Tomás - In: Journal of Political Economy 118 (2010) 3, pp. 433-484
We present a general equilibrium model of the response of firms' decisions to operate, innovate, and engage in international trade to a change in the marginal cost of international trade. We find that, although a change in trade costs can have a substantial impact on heterogeneous firms' exit,...