selection of the most efficient firms. The model is estimated on E.U. data and simulated in counterfactual scenarios that … presence of selection effects. Even in a relatively integrated economy as the E.U., dismantling residual trade barriers would …

and variable markups using firm-level data and aggregate trade figures on a panel of 11 EU countries. We find that EU … caused an average productivity loss of roughly 13 percent, whereas a reduction of intra-EU trade costs by 5 percent would …