Trading Away Wide Brands for Cheap Brands
研究贸易政策如何影响企业产品种类创新和生产工艺创新，发现产品创新带来的福利收益超过标准贸易收益，且贸易自由化会改变创新政策的相对回报。
Firms face competing needs to expand product variety and reduce production costs. Access to larger markets enables innovation to reduce costs. Although firm scale increases, foreign competition reduces markups. Firms' ability to recapture lost markups depends on the interplay between within-firm competition and across-firm competition. Narrowing product variety eases within-firm competition but lowers market share. I provide a theory detailing the impact of trade policy on product and process innovation. Unbundling innovation provides new insights into welfare gains and innovation policy. Product innovation increases welfare beyond standard gains from trade. The relative returns to innovation policy change with trade liberalization.