Credit constraints, endogenous innovations, and price setting in international trade

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Credit constraints, endogenous innovations, and price setting in international trade. / Eckel, Carsten; Unger, Florian.

In: International Economic Review, Vol. 64, No. 4, 11.2023, p. 1715-1747.

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@article{16380cf0dcfd4f818b47143e3aea1d77,
title = "Credit constraints, endogenous innovations, and price setting in international trade",
abstract = "This article analyzes the role of credit frictions in a trade model where producers differ in their capabilities to conduct process and quality innovations and require external finance for investments. Accounting for cost-based and quality-based sorting of firms in a unified framework allows us to demonstrate that the reactions of prices and commonly used productivity measures do not necessarily reflect welfare implications. Credit frictions lead to distortions through aggravated access to finance and endogenous price adjustments so that the responses of quantity-based and revenue-based productivity differ substantially. In counterfactual scenarios, we show that these differential effects are quantitatively important.",
keywords = "Economics",
author = "Carsten Eckel and Florian Unger",
note = "Publisher Copyright: {\textcopyright} 2023 The Authors. International Economic Review published by Wiley Periodicals LLC on behalf of the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.",
year = "2023",
month = nov,
doi = "10.1111/iere.12651",
language = "English",
volume = "64",
pages = "1715--1747",
journal = "International Economic Review",
issn = "0020-6598",
publisher = "John Wiley & Sons Inc.",
number = "4",

}

RIS

TY - JOUR

T1 - Credit constraints, endogenous innovations, and price setting in international trade

AU - Eckel, Carsten

AU - Unger, Florian

N1 - Publisher Copyright: © 2023 The Authors. International Economic Review published by Wiley Periodicals LLC on behalf of the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

PY - 2023/11

Y1 - 2023/11

N2 - This article analyzes the role of credit frictions in a trade model where producers differ in their capabilities to conduct process and quality innovations and require external finance for investments. Accounting for cost-based and quality-based sorting of firms in a unified framework allows us to demonstrate that the reactions of prices and commonly used productivity measures do not necessarily reflect welfare implications. Credit frictions lead to distortions through aggravated access to finance and endogenous price adjustments so that the responses of quantity-based and revenue-based productivity differ substantially. In counterfactual scenarios, we show that these differential effects are quantitatively important.

AB - This article analyzes the role of credit frictions in a trade model where producers differ in their capabilities to conduct process and quality innovations and require external finance for investments. Accounting for cost-based and quality-based sorting of firms in a unified framework allows us to demonstrate that the reactions of prices and commonly used productivity measures do not necessarily reflect welfare implications. Credit frictions lead to distortions through aggravated access to finance and endogenous price adjustments so that the responses of quantity-based and revenue-based productivity differ substantially. In counterfactual scenarios, we show that these differential effects are quantitatively important.

KW - Economics

UR - http://www.scopus.com/inward/record.url?scp=85167365686&partnerID=8YFLogxK

U2 - 10.1111/iere.12651

DO - 10.1111/iere.12651

M3 - Journal articles

AN - SCOPUS:85167365686

VL - 64

SP - 1715

EP - 1747

JO - International Economic Review

JF - International Economic Review

SN - 0020-6598

IS - 4

ER -

DOI