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Firm heterogeneity, variable markups, and multinational production: A review from trade policy perspective

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  • Ziran Ding

Abstract

This paper surveys the main ingredients and results of heterogeneous firms trade policy literature that has been developing since the early 2000s. First, I present the stylized facts regarding firm heterogeneity, firm‐level markups, and multinational production's (MP) global structure. I then survey the trade policy papers that build on the workhorse model of firm heterogeneity. Third, I summarize the recent development of theoretical approaches of modeling the firm‐level markups and its trade policy implication. Fourth, I discuss the theoretical frameworks that incorporate MP into heterogeneous firms' framework and their trade policy implication. Finally, I discuss directions for future research and offer suggestions for further readings.

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  • Ziran Ding, 2022. "Firm heterogeneity, variable markups, and multinational production: A review from trade policy perspective," Journal of Economic Surveys, Wiley Blackwell, vol. 36(5), pages 1311-1357, December.
    • Handle: RePEc:bla:jecsur:v:36:y:2022:i:5:p:1311-1357
    DOI: 10.1111/joes.12486
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    2. HOSONO Kaoru & TAKIZAWA Miho & YAMANOUCHI Kenta, 2022. "Foreign Direct Investment and Markups," Discussion papers 22009, Research Institute of Economy, Trade and Industry (RIETI).
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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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