Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/247296 
Year of Publication: 
2021
Series/Report no.: 
LEM Working Paper Series No. 2021/27
Publisher: 
Scuola Superiore Sant'Anna, Laboratory of Economics and Management (LEM), Pisa
Abstract: 
We build a simple dynamic model to study the effects of technological learning, market selection and international competition in the determination of export flows and market shares. The model features two countries populated by firms with heterogeneous productivity levels and sales. Market selection in each country is driven by a finite pairwise Pólya urn process. We show that market selection leads either to a national or to an international monopoly in presence of a static distribution of firm productivity levels. We then incorporate firm learning and entry-exit in the model and we show that the market structure does not converge to a monopoly. In addition, we show that the extended model is able to jointly reproduce a wide ensemble of stylized facts concerning intra-industry trade, industry and firm dynamics.
Subjects: 
International trade
industrial dynamics
firm dynamics
market selection
Pólya urn
JEL: 
C15
F1
L1
Document Type: 
Working Paper

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