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- Title
Decomposition of extensive and intensive margin impacts of trade policies.
- Authors
Zhao, Xin; Luckstead, Jeff; Devadoss, Stephen
- Abstract
Using a multi‐region heterogeneous‐firm trade model, this paper develops a method to decompose volumes and values of domestic sales, bilateral trade, total production and consumption into their intensive and extensive margins. With the free‐entry condition, the extensive margin is further decomposed into two subcategories: operating‐extensive margin and entrance/exit‐extensive margin. This method can provide ex ante predictions on gains and losses in the margins of member and nonmember countries following a trade agreement. We apply our decomposition methods to quantitatively analyse the impacts of CETA between Canada and the European Union on the world processed food industry.
- Subjects
CANADA; EUROPEAN Union; MARGINS (Security trading); DECOMPOSITION method; BILATERAL trade; COMMERCIAL policy; FOOD industry; MONOPOLISTIC competition
- Publication
World Economy, 2022, Vol 45, Issue 4, p971
- ISSN
0378-5920
- Publication type
Article
- DOI
10.1111/twec.13190