Heterogeneous firms, trade liberalization and agglomeration

P>In this study, we develop an economic model to examine agglomeration of heterogeneous firms following trade liberalization. In a closed economy, we show that high-productivity firms are more likely to agglomerate because they benefit more from agglomeration than their low-productivity counterparts. However, trade liberalization, especially with a high-productivity partner, favours partial agglomeration; that is, low-productivity firms relocate away from the region where high-productivity firms agglomerate. Consequently, the welfare gap between the domestic regions of an economy narrows following trade liberalization. The latter result suggests that trade liberalization promotes regional economic development.On developpe un modele economique pour examiner l'agglomeration de firmes heterogenes a la suite de la liberalisation du commerce. Dans une economie fermee, on montre que les firmes a haute productivite sont davantage susceptibles de s'agglomerer parce qu'elles tirent plus d'avantages de l'agglomeration que les firmes a basse productivite. Cependant, la liberalisation du commerce, en particulier avec un partenaire a haute productivite, favorise l'agglomeration partielle, i.e., que les firmes a basse productivite se relocalise hors de la region ou les firmes a haute productivite s'agglomerent. En consequence, l'ecart de bien-etre entre les regions domestiques d'une economie s'amenuise a la suite de la liberalisation du commerce. Ce dernier resultat suggere que la liberalisation du commerce favorise le developpement economique regional.