Kiel Working Papers, Kiel Institute for World Economics
No 1600:
Technology Choice and International Trade
Gabriela Schmidt
Abstract: This paper develops two extensions of the dynamic model
presented in Melitz (2003). The first extension consists in the
introduction of technology choice between three alternative production
technologies: L, M and H. L is assumed to be the same as Melitz’s single
production technology, while M and H are assumed to be superior production
technologies, stemming this superiority from the fact these technologies
substitute the more primitive capital goods used in technology L with
newer, updated versions which embody technological advances, and also from
the fact that M and H are more skill-intensive than L. Technologies M and H
are equally skill-intensive, but H still is superior to M because it
incorporates world-technology-frontier capital goods, while the capital
goods used in M are below such frontier. The second extension consists in
the introduction of two different exporting profiles: “Low-Commitment
Exporters” –who make the minimum possible investment required to penetrate
export markets- and “High-Commitment Exporters” –who are ready to make
additional trade-related investments in order to gain additional export
sales-
Keywords: technology choice – heterogeneous firms – export profiles – embodied technology –resources’ redistribution – monopolistic competition; (follow links to similar papers)
JEL-Codes: O14,; O33; (follow links to similar papers)
44 pages, March 2010
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