Do trade policy differences induce sorting? Theory and evidence from Bangladeshi apparel exporters

@inproceedings{Demidova2006DoTP,
  title={Do trade policy differences induce sorting? Theory and evidence from Bangladeshi apparel exporters},
  author={Svetlana Demidova and Hiau Looi Kee and Kala Krishna},
  year={2006}
}
This paper provides a new heterogeneous firm model for trade where firms differ in their productivity and experience different market demand shocks. The model incorporates the variations in trade policy, trade preferences, and the rules of origin needed to obtain them that are faced by Bangladeshi garment exporters to the US and EU. We estimate firm's productivity using an extension of the Olley Pakes procedure that accounts for the biases arising from both demand shocks and productivity being… CONTINUE READING