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Despite the fact that importing and exporting are extremely rare firm activities, economists generally devote little attention to the role of firms when discussing international trade. This paper summarizes key differences between trading and non-trading firms, demonstrates how these differences...
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foreign tariffs will induce these firms to simultaneously export and invest in productivity. In contrast, lower foreign … tariffs will induce higher-productivity firms to export without investing, as in Melitz (2003). We model this econometrically …
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