Article ID Journal Published Year Pages File Type
5092506 Journal of Comparative Economics 2010 12 Pages PDF
Abstract
► Segal's model of soft budget constraint (SBC) is expanded to monopolistically competitive firms. ► SBC model is imbedded in Melitz-type model of international trade. ► Under trade liberalization some firms that would export in the absence of SBC choose not to export. ► Overall, trade liberalization reduces aggregate inefficiencies generated by SBC.
Keywords
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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Trade liberalization, heterogeneous firms and the soft budget constraint
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