Staff Report 533

The Opportunity Costs of Entrepreneurs in International Trade

Timothy J. Kehoe | Consultant
Pau S. Pujolàs | McMaster University
Kim J. Ruhl | University of Wisconsin and National Bureau of Economic Research

Published August 1, 2016

We show that a trade model with an exogenous set of heterogeneous firms with fixed operating costs has the same aggregate outcomes as a span-of-control model. Fixed costs in the heterogeneous-firm model are entrepreneurs' forgone wage in the span-of-control model.

Published In: Economics Letters (Vol. 146, 2016, pp. 01-03)

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