New New Trade Theory
Updated 2026-08-01
INTRODUCTION
English translation pending.
CORE DEFINITION
Developed by Marc Melitz and colleagues from the late 1990s onward, this theory extends new trade theory by introducing heterogeneous firms into trade models. Its core claim is that only firms above a productivity threshold can bear the fixed costs of exporting, so trade liberalization reallocates market share, labor, and capital toward high-productivity firms while forcing low-productivity firms to exit. Aggregate productivity therefore rises even if no surviving firm becomes more efficient. The mechanism depends on fixed export costs, sunk entry costs, and imperfect competition.
SCAFFOLDING EFFECT
Reduce cognitive load
- Firm-level analysis: explain why trade helps some firms and destroys others in the same industry. - Entry decision: test whether your productivity clears the export threshold before committing. - Policy appraisal: count selection and reallocation gains, not just trade volumes.
Anchor fast decisions
Trade raises the profit bar: fixed export and entry costs mean only high-productivity firms can serve foreign markets profitably. As market share shifts to them, demand for labor and capital rises at productive firms and falls at marginal ones. The least productive firms exit, and the surviving mix is more efficient, so industry productivity rises through reallocation rather than through improvement inside each firm.
MINIMUM ACTION
In progress 0/1Practice this model in one real situation:
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Source support: Explicit
- wiki.mbalib.comhttps://wiki.mbalib.com/w/index.php?title=%E6%96%B0%E6%96%B0%E8%B4%B8%E6%98%93%E7%90%86%E8%AE%BA&variant=zh-tw&printable=yesverified
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