quality innovations at low costs, whereas investment outlays have to be financed by external capital. We show that the scope … types of innovation resulting in opposing effects on marginal production costs and prices. In general equilibrium, financial … frictions intensify quality-based (cost-based) sorting of firms if the scope for vertical product differentiation is high (low …

This paper introduces quality innovations with endogenous sunk costs in a heterogeneous firm model of international … model and simulate the effects of a reduction in fixed trade barriers. Accounting for quality lowers the positive gains from … trade and leads to more heterogeneous effects across industries compared to a trade model without quality investments …

a substantial impact on heterogeneous firms' exit, export, and process innovation decisions, the impact of changes in … these decisions on welfare is largely offset by the response of product innovation. Our results suggest that microeconomic …

This paper studies the consequences of parallel import (PI) on process innovation of firms heterogeneous in their …. The impact of PI on innovation is determined by the degree of heterogeneity between firms and trade costs. Increasing … market, hence increases its innovation efforts. A tariff policy accompanied by opening borders to PI only increases welfare …

This paper studies the consequences of parallel import (PI) on process innovation of firms heterogeneous in their …. The impact of PI on innovation is determined by the degree of heterogeneity between firms and trade costs. Increasing … market, hence increases its innovation efforts. A tariff policy accompanied by opening borders to PI only increases welfare …

This paper investigates whether and how import competition affects firm innovation. Using China’s World Trade … Organization (WTO) accession as a quasi-natural experiment, we find that import competition reduces firm innovation, which is …

This paper introduces quality innovations with endogenous sunk costs in a heterogeneous firm model of international … model and simulate the effects of a reduction in fixed trade barriers. Accounting for quality lowers the positive gains from … trade and leads to more heterogeneous effects across industries compared to a trade model without quality investments …