Trade, location, and multi-product firms

Rikard Forslid, Toshihiro Okubo

Research output: Contribution to journalArticlepeer-review


In this paper we study how trade liberalization affects the location and the product scope of firms. We find that the largest and most productive multi-product firms concentrate to the larger market as a result of trade liberalization. In the presence of relocation costs, we also find that these firms will expand their product scope in the larger market while firms in the smaller market will contract their product scope or expand it to a smaller degree. The adjustment of firms’ product scope can therefore be a substitute for firm relocation, and the cost of introducing new varieties becomes an important parameter, that influences the degree of agglomeration.

Original languageEnglish
Article number103891
JournalRegional Science and Urban Economics
Publication statusPublished - 2023 May


  • Firm location
  • Heterogeneous firms
  • Multi-product firms
  • Trade liberalization

ASJC Scopus subject areas

  • Economics and Econometrics
  • Urban Studies


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