TY - JOUR
T1 - Trade, location, and multi-product firms
AU - Forslid, Rikard
AU - Okubo, Toshihiro
N1 - Funding Information:
This study is conducted as a part of the project “East Asian Industrial Productivity” undertaken at the Research Institute of Economy, Trade and Industry (RIETI). This study utilizes the micro data of the questionnaire information based on “METI Basic Survey of Japanese Business Structure and Activities” and “Census of Manufacture” which are conducted by the Ministry of Economy, Trade and Industry (METI), and the Kogyotokei converter, which is provided by RIETI. The author is grateful for helpful comments at RIETI DP seminar, ETSG conference 2022, and Rimini Workshop on International Trade and Intellectual Property Rights. Financial support from the Jan Wallander and Tom Hedelius Research Foundation ( P20-0257 ) and the Swedish Research Council ( 2020-02554 ) is gratefully acknowledged by Forslid, and Okubo is grateful for financial support from JSPS ( 19H01487 ).
Funding Information:
This study is conducted as a part of the project “East Asian Industrial Productivity” undertaken at the Research Institute of Economy, Trade and Industry (RIETI). This study utilizes the micro data of the questionnaire information based on “METI Basic Survey of Japanese Business Structure and Activities” and “Census of Manufacture” which are conducted by the Ministry of Economy, Trade and Industry (METI), and the Kogyotokei converter, which is provided by RIETI. The author is grateful for helpful comments at RIETI DP seminar, ETSG conference 2022, and Rimini Workshop on International Trade and Intellectual Property Rights. Financial support from the Jan Wallander and Tom Hedelius Research Foundation (P20-0257) and the Swedish Research Council (2020-02554) is gratefully acknowledged by Forslid, and Okubo is grateful for financial support from JSPS (19H01487).
Publisher Copyright:
© 2023 The Author(s)
PY - 2023/5
Y1 - 2023/5
N2 - 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.
AB - 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.
KW - Firm location
KW - Heterogeneous firms
KW - Multi-product firms
KW - Trade liberalization
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U2 - 10.1016/j.regsciurbeco.2023.103891
DO - 10.1016/j.regsciurbeco.2023.103891
M3 - Article
AN - SCOPUS:85150392776
SN - 0166-0462
VL - 100
JO - Regional Science and Urban Economics
JF - Regional Science and Urban Economics
M1 - 103891
ER -