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Do non‐exporters lose from lower trade costs?

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  • Facundo Piguillem
  • Loris Rubini
Abstract
We study the reaction of non‐exporters to openness. While static models suggest non‐exporters lose from openness, dynamic ones where firms can innovate allow for gains from internalizing future exports. Developing a tractable model with productivity choices where both effects are present, we show analytically that the former effect dominates for small non‐exporters, while the latter dominates for large ones. Calibrating to US data, 59% of non‐exporters gain with openness, and the average non‐exporter growth rate increases by 0.02% per point drop in trade costs.

Suggested Citation

  • Facundo Piguillem & Loris Rubini, 2021. "Do non‐exporters lose from lower trade costs?," Review of International Economics, Wiley Blackwell, vol. 29(5), pages 1161-1185, November.
    • Handle: RePEc:bla:reviec:v:29:y:2021:i:5:p:1161-1185
    DOI: 10.1111/roie.12540
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    1. Piguillem Facundo & Rubini Loris, 2019. "Barriers to firm growth in open economies," The B.E. Journal of Macroeconomics, De Gruyter, vol. 19(1), pages 1-36, January.

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