Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/226304 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8602
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
This paper challenges the common assumption of market segmentation in international trade. To analyze export entry and pricing decisions of firms in integrated vs. segmented markets, we develop a novel tractable approach based on stochastic export costs that allows us to compare firm-level and aggregate outcomes under arbitrary market interdependence. We find that allowing for potential re-exporting arbitrage between countries imposes constraints on export prices of firms and has first-order implications for trade and welfare.
Subjects: 
market segmentation
pricing constraints
gains from trade
JEL: 
F12
F13
F14
F15
Document Type: 
Working Paper
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