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- Publisher Website: 10.1016/j.euroecorev.2018.11.006
- Scopus: eid_2-s2.0-85057247727
- WOS: WOS:000456229100020
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Article: Trade Liberalization, Agency Problem and Aggregate Productivity
Title | Trade Liberalization, Agency Problem and Aggregate Productivity |
---|---|
Authors | |
Keywords | Trade liberalization Firm productivity Separation of ownership and control Managerial incentives |
Issue Date | 2018 |
Publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/eer |
Citation | European Economic Review, 2018, v. 111, p. 421-442 How to Cite? |
Abstract | Evidence shows that trade liberalization mitigates the agency problem inside firms that have production inefficiencies and incentivizes these firms to improve management quality. In order to strengthen our understanding of this phenomenon, I propose an industry equilibrium trade model with heterogeneous firms. When an economy opens up to trade, managers of the least productive surviving firms are incentivized to exert more effort, although they face shrinking market size in the open economy. This leads to improved productivity within these firms. I then show that managerial incentives have a non-monotonic impact on the aggregate productivity gains from an episode of trade liberalization. Finally, I calibrate the model using plant-level data from Colombia, and find that the interaction between managerial incentives and trade liberalization has a quantitatively sizable effect on the productivity gains from trade. |
Description | eid_2-s2.0-85057247727link_to_subscribed_fulltext |
Persistent Identifier | http://hdl.handle.net/10722/285053 |
ISSN | 2023 Impact Factor: 2.8 2023 SCImago Journal Rankings: 2.251 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Chen, C | - |
dc.date.accessioned | 2020-08-07T09:06:06Z | - |
dc.date.available | 2020-08-07T09:06:06Z | - |
dc.date.issued | 2018 | - |
dc.identifier.citation | European Economic Review, 2018, v. 111, p. 421-442 | - |
dc.identifier.issn | 0014-2921 | - |
dc.identifier.uri | http://hdl.handle.net/10722/285053 | - |
dc.description | eid_2-s2.0-85057247727link_to_subscribed_fulltext | - |
dc.description.abstract | Evidence shows that trade liberalization mitigates the agency problem inside firms that have production inefficiencies and incentivizes these firms to improve management quality. In order to strengthen our understanding of this phenomenon, I propose an industry equilibrium trade model with heterogeneous firms. When an economy opens up to trade, managers of the least productive surviving firms are incentivized to exert more effort, although they face shrinking market size in the open economy. This leads to improved productivity within these firms. I then show that managerial incentives have a non-monotonic impact on the aggregate productivity gains from an episode of trade liberalization. Finally, I calibrate the model using plant-level data from Colombia, and find that the interaction between managerial incentives and trade liberalization has a quantitatively sizable effect on the productivity gains from trade. | - |
dc.language | eng | - |
dc.publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/eer | - |
dc.relation.ispartof | European Economic Review | - |
dc.subject | Trade liberalization | - |
dc.subject | Firm productivity | - |
dc.subject | Separation of ownership and control | - |
dc.subject | Managerial incentives | - |
dc.title | Trade Liberalization, Agency Problem and Aggregate Productivity | - |
dc.type | Article | - |
dc.identifier.email | Chen, C: ccfour@hku.hk | - |
dc.identifier.authority | Chen, C=rp01944 | - |
dc.identifier.doi | 10.1016/j.euroecorev.2018.11.006 | - |
dc.identifier.scopus | eid_2-s2.0-85057247727 | - |
dc.identifier.hkuros | 312346 | - |
dc.identifier.volume | 111 | - |
dc.identifier.spage | 421 | - |
dc.identifier.epage | 442 | - |
dc.identifier.isi | WOS:000456229100020 | - |
dc.publisher.place | Netherlands | - |
dc.identifier.issnl | 0014-2921 | - |