1. Market Size, Trade, and Productivity Melitz, Marc J., and Gianmarco I. P. Ottaviano. 2008. Подготовила Растворцева Светлана Белгородский государственный университет 1

2. A monopolistically competitive model of trade Firm heterogeneity in terms of productivity differences Endogenous differences in the toughness of competition across markets – in terms of the number and average productivity of comp. firms 2

3. 3

4. Market Size, Trade, and Productivity Closed Economy Open Economy Trade Liberalization 4

5. 1. Closed Economy 1.1. Preferences and Demand Consider an economy with L consumers, each supplying one unit of labor. All consumers share the same utility function given by (1) 5

6. 1. Closed Economy 1.1. Preferences and Demand Assume The inverse demand for each variety i is then given by (2)(2) (3)(3) 6

7. 1. Closed Economy 1.1. Preferences and Demand (4)(4) (5)(5) 7

8. 1. Closed Economy 1.2. Production and Firm Behavior (6)(6) 8

9. (7)(7) (8)(8) 9 (9)(9) (10) (11)

10. 1. Closed Economy 1.3. Free Entry Equilibrium 10 (13) (12)

11. 1. Closed Economy 1.4. Parametrization of Technology 11 (13) (14) (15)

12. 1. Closed Economy 1.4. Parametrization of Technology 12 (16)

13. 1. Closed Economy 1.4. Parametrization of Technology 13

14. 1. Closed Economy 1.4. Parametrization of Technology 14 (17)

15. 1. Closed Economy 1.5. A Short-Run Equilibrium 15 (17)

16. 1. Closed Economy 1.5. A Short-Run Equilibrium 16

17. 2. Open Economy 17 (18)

18. 2. Open Economy 18

19. 2. Open Economy 19 (19)

20. 2. Open Economy 20 (20) (21)

21. 2. Open Economy 2.1. Free Entry Condition 21 (22)

22. 2. Open Economy 2.1. Free Entry Condition 22 (23)

23. 2. Open Economy 2.2. Prices, Product Variety, and Welfare 23

24. 2. Open Economy 2.2. Prices, Product Variety, and Welfare 24 (24) (25)

25. 2. Open Economy 2.3. Number of Entrants, Producers, and Exporters 25 (26)

26. 2. Open Economy 2.4. Reciprocal Dumping and Arbitrage Opportunities 26

27. 2. Open Economy 2.5. The Impact of Trade 2.6. Market Size Effects 27

28. 2. Open Economy 2.7. The Open Economy in the Short-Run 28

29. 2. Open Economy 2.7. The Open Economy in the Short-Run 29 (27)

30. 2. Open Economy 2.7. The Open Economy in the Short-Run 30 (28)

31. 3. Trade Liberalization 3.1. Bilateral Liberalization 3.2. Unilateral Liberalization 3.3. Preferential Liberalization 31

32. 3. Trade Liberalization 3.3. Preferential Liberalization 32

33. 3. Trade Liberalization 3.3. Preferential Liberalization 33

34. 3. Trade Liberalization 3.3. Preferential Liberalization 34

35. 3. Trade Liberalization 3.3. Preferential Liberalization 35

36. Спасибо! 36