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Innovation, mark-ups and the degree of trade openness vary substantially across sectors. This paper builds a multi … autarky to free trade promotes innovation and productivity growth in those sectors which are initially less competitive …. However, when the initial tariff level is common across sectors, a homogeneous tariff reduction promotes innovation in those …
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A framework is developed with what we call technology capital. A country is a measure of locations. Absent policy constraints, a firm owning a unit of technology capital can produce the composite output good using the unit of technology capital at as many locations as it chooses. But it can...
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