Economics, Econometrics and Finance
4 years ago

Global trade liberalization favors big corporations, squeezing out small businesses.

RePEc: Research Papers in Economics
Large and small firms in a global market: David vs. Goliath
Mathieu Parenti

Paper Summary

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The article explores how trade liberalization affects big and small companies in the same market. Large firms charge higher prices due to their efficiency, while small firms struggle to compete. Free trade boosts competition and welfare, but it can lead to small firms closing down. This results in more product variety but also higher prices for consumers.