The Department of Economics Macroeconomics Seminar Series presents

"The Elusive Pro-Competitive Effects of Trade"
Andres Rodriguez-Clare, Professor of Economics, UC Berkeley

Wednesday, October 24, 2012
3:30-5:00 p.m.
Social Science Plaza B, Room 3218

Rodriguez-Clare studies the pro-competitive effects of international trade, or lack thereof, in models with monopolistic competition, firm-level heterogeneity, and variable markups. Under standard restrictions on consumers’ demand and the distribution of firms’ productivity, he derives two theoretical results. First, although markups vary across firms, the distribution of markups and the share of aggregate profits in revenues are invariant to changes in openness to trade. Second, although the distribution of markups and the share of aggregate profits in revenues are unaffected by trade, gains from trade liberalization are weakly lower than those predicted by the models with constant markups considered in Arkolakis, Costinot, and Rodríguez-Clare (2012).

For further information, please contact Gloria Simpson, 949-824-5788 or simpsong@uci.edu.