An Agent Based Model of Monopolistic Competition in International Trade with Emerging Firm Heterogeneity

Abstract

Export firms have better performance than firms that do not export, the so-called exporter premia: exporters are larger, they are relatively more capital and skill intensive, exporters have higher productivity (Bernard et al. 2007a;Bernard et al. 2005). The better performance of exporters may be the result of a self-selection effect: only the most competitive firms are able to enter foreign markets (ex-ante self-selection). On the other hand, exporting may improve firm performance (ex-post effect). Differences between exporters and non-exporters may have a significant impact on aggregate welfare and growth; in particular, disentangling the importance of the ex-ante effect from the ex-post effect may be useful for designing public policies (Bernard & Jensen 1999). The economic approach based on the Melitz ( 2003) model analyzes the exporter premia using monopolistic competition markets with firm heterogeneity in terms of a given distribution of firm productivity. This paper presents an agent based simulation of a monopolistic competition market in which firm heterogeneity is an emerging pattern of firms' choices and interactions, conceiving productivity growth as the results of firms' individual innovative efforts. The model is able to replicate the better performance of exporters, stressing the importance of decision-making processes and learning capabilities of firms in determining both the ex-ante and the ex-post effects.

Combating Rhino Horn Trafficking: The Need to Disrupt Criminal Networks

“…Individual-based ecological [60] and agent-based economic [27] modeling can track the trends in prices paid to poachers at various levels of the supply chain, but more importantly can track rhino population changes. Predictions are thus based on approaches that track historical patterns, thus reducing some of the uncertainty surrounding the prediction that introducing legal trade in rhino horn to the current status quo may lead to non-sustainable rhino populations.…”

“…To assist in defining trends in potential consumers, we extracted Asian population projections up to 2040 (Table 2). We used population changes from 2006 to 2014 contained in this data to parameterize the agent-based economic sub-model [27]. …”

“…An agent-based economic sub-model [27] accounts for the international trade in rhino poaching goods [30]. An individual-based sub-model of rhinos [30] that accounts for density- and environmental-dependent birth and death processes [24] integrates with poaching predicted by the agent-based economic sub-model.…”

“…Building on [27], we construct an agent-based sub-model of the international trade in rhino poaching goods across three markets. Our sub-model contains a criminal network involved in rhino horn trafficking; a firm involved in seeking to trade legally in horn; the effect of a meta-firm serving the international SEAR market; and the effect of a local, South African meta-firm serving the rhino hunting market.…”

Finding politically feasible conservation policies: the case of wildlife trafficking

“…This submodel is derived from a model developed by Catullo (). In general, an agent‐based economic model represents individual firms as agents and individual consumers as agents.…”