Research
Research
Abstract: I study the aggregate surplus effects of input trade liberalization under oligopolistic competition. I use a multi-country model accounting for endogenous sourcing decisions and strategic behavior of heterogeneous firms to quantify the welfare effects of the accession of Ukraine into WTO in 2008 on Ukrainian food-processing sectors. I find that welfare improves slightly under oligopolistic competition, with consumers gaining and firms losing. Endogenous adjustment of sourcing strategies accounts for a quantitatively important fraction of welfare gains. Strategic sourcing and variability in markups both contribute to smaller welfare improvement than under monopolistic competition.
Presented at: 16th FIW Research Conference "International Economics" (WU Vienna, 2024), 17th RGS Doctoral Conference (Universität Duisburg-Essen, 2024), the 25th Workshop "Internationale Wirtschaftsbeziehungen" (Universität Göttingen, 2024), 23rd RIEF Doctoral Meeting (PSL, 2024), 39th ENTER Jamboree (ULB, 2024), 7th Workshop on International Economic Networks (University of Vienna, 2024), 25th European Trade Study Group Conference (Athens University of Economics and Business, 2024)
Financial Frictions, Variable Markups, and Unilateral Trade Liberalization, joint work with Mykola Ryzhenkov and Volodymyr Vakhitov
Abstract: We study a response of a small open economy with credit constraints and variable markups to unilateral trade liberalization by a more developed trading partner. We use a dynamic heterogeneous agents model based on Kohn et al. (2020) to quantify the welfare and allocative efficiency effects of enacting Autonomous Trade Preferences by the EU countries for Ukraine in 2014 year. To obtain a better match with the data, we allow for variable markups in the domestic market, endogenous trade imbalances, and interest rate increasing with the level of foreign debt. We find that better market access improves welfare but lowers allocative efficiency in the economy, as reduction in markup dispersion is too weak to offset increase in capital misallocation. Variable markups exacerbate worsening allocative efficiency in the presence of credit constraints.
Presented at: 1st JIE Summer School (University of Crete, 2023, Poster), Doctoral Workshop on Quantitative Dynamic Economics (University of Strasbourg, 2023), 6th FHM+ Development Economics Workshop(Frankfurt am Main, 2023), 16th FIW Research Conference "International Economics" (WU Vienna, 2024), the 25th Workshop "Internationale Wirtschaftsbeziehungen" (Universität Göttingen, 2024), First International Virtual Conference on Ukraine (Jönköping International Business School, Sweden, 2024), 25th European Trade Study Group Conference (Athens University of Economics and Business, 2024)