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The Interaction Between Technology Adoption and Trade When Firms are Heterogeneous

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Abstract

This paper develops a monopolistic competition model with heterogeneous firms to study the interaction between technology adoption and trade in a world of two countries facing different technology adoption costs. It shows that a reduction in the technology adoption cost in one country increases the productivity, induces more firms to adopt advanced technology, and improves welfare in this country, while decreasing the pro- ductivity, inducing more firms to switch back to old technology, and reducing welfare in the other country. Furthermore, although a reduction in transport costs always makes the country with lower adoption cost better off, it can hurt the other country.

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  • Bulent Unel, 2010. "The Interaction Between Technology Adoption and Trade When Firms are Heterogeneous," Departmental Working Papers 2010-03, Department of Economics, Louisiana State University.
    • Handle: RePEc:lsu:lsuwpp:2010-03
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    Cited by:

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    2. Elias Dinopoulos & Bulent Unel, 2017. "Managerial capital, occupational choice and inequality in a global economy," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(2), pages 365-397, May.
    3. Antonio Navas & Antonella Nocco, 2021. "Trade liberalization, selection, and technology adoption with vertical linkages," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 979-1012, September.
    4. Dinopoulos, Elias & Unel, Bulent, 2015. "Entrepreneurs, jobs, and trade," European Economic Review, Elsevier, vol. 79(C), pages 93-112.
    5. Elias Dinopoulos & Bulent Unel, 2014. "Firm Productivity, Occupational Choice, and Inequality in a Global Economy (revised March 2015)," Departmental Working Papers 2014-04, Department of Economics, Louisiana State University.
    6. Nishiyama, Hiroyuki & Gintani, Yasuhiro & Tsuboi, Mizuki, 2024. "The impact of trade on growth and welfare with heterogeneous firms and rent-sharing," International Review of Economics & Finance, Elsevier, vol. 89(PB), pages 731-742.
    7. Rutzer, Christian, 2014. "A Theory of Trade Liberalization and Innovations with Heterogeneous Firms," Working papers 2014/02, Faculty of Business and Economics - University of Basel.
    8. Klügl, Franziska & Kyvik Nordås, Hildegunn, 2021. "AI-enabled Automation, Trade, and the Future of Engineering Services," Working Papers 2021:16, Örebro University, School of Business.
    9. Rutzer, Christian, 2014. "From the Loser to the Winner - How Trade Liberalization can lead to Leapfrogging between Countries," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100313, Verein für Socialpolitik / German Economic Association.

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