Industry Structure for Exporting and Import Competing Firms

1. Explain the differences between exporting firms, and import-competing firms. Give an example of each.

2. List any five entry costs that are borne by most exporting firms.

3. Traditional trade theory suggests that resource allocation occurs across industries. However, the finding of Balassa (1966, 1967) suggest that resource allocation mostly occurs within the same industry. Please comment.

4. Why does trade liberalization affect labor markets across countries differently?

5. Why do Western European labor markets generally experience lower TFP compared to U.S. labor markets?

6. List any four factors that cause friction in labor markets.