【Trade Seminar】Entry and Welfare in General Equilibrium with Heterogeneous Firms and Endogenous Markups

  • 研討會日期 : 2023-04-11
  • 時間 : 14:30
  • 主講人 : Professor Seunghoon Lee
  • 地點 : Conference room B110
  • 主持人 : Professor Wen-Tai Hsu
  • 演講者簡介 : Professor Seunghoon Lee received his Ph.D. in Economics from Stanford University in 2015. He is currently an Assistant Professor at Yonsei University. His research interests are international trade and urban economics.
  • 演講摘要 : We consider the efficiency of market entry in single- and two-sector closed-economy versions of the Melitz-Ottavanio (MO) model, where differently from the MO model our two-sector model does not involve an outside good. For each model version, we assess whether the market level of entry is efficient relative to the second-best setting in which the planner can control only the level of entry. Focusing on entry levels that induce selection, we show that the market level of entry is efficient in the single-sector model. For a two-sector MO model without an outside good, we show that the welfare results are exactly similar to those in the one-sector model when the two sectors are symmetric. When the two sectors are asymmetric and the level of asymmetry is sufficiently small, we identify a perturbation indicating a sense in which the market level of entry into the “high-demand” sector is excessive. This intersectoral misallocation occurs at the market equilibrium even though endogenous average markups are equal across sectors. We also show how the outcomes induced by the planner’s direct choice of entry levels alternatively can be induced through the appropriate choice of entry tax/subsidy policies.