International trade and industrial dynamics

Josh Ederington, Phillip McCalman

Research output: Contribution to journalArticlepeer-review

10 Scopus citations


In this article, industrial evolution is driven by endogenous technology choices of firms, generating a rich environment that includes the possibility of a dramatic shakeout. The likelihood, magnitude, and timing of this shakeout are characterized and depend not only on the size of an innovation but also on cost structure. In this setting, trade liberalization reduces the likelihood of a shakeout, resulting in more stable industrial structures. However, when shakeouts arise in global markets, the distribution of exits can vary widely across countries. Furthermore, conditions exist where a shakeout occurs in a closed economy but not in an open economy.

Original languageEnglish
Pages (from-to)961-989
Number of pages29
JournalInternational Economic Review
Issue number3
StatePublished - Aug 2009

ASJC Scopus subject areas

  • Economics and Econometrics


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