||Heterogeneous firms and cost sharing in China's marketplaces
Ding, Ke ,
Gokan, ToshitakaZhu, Xiwei
IDE Discussion Paper = IDE Discussion Paper
5822016-03-01 , Institute of Developing Economies (IDE-JETRO)
This study extends Melitz's model with heterogeneous firms by introducing shared fixed costs in a marketplace. It aims to explain heterogeneous firms' choice between traditional marketplaces and modern distribution channels on the basis of their productivities. The results reveal that the co-existence of a traditional marketplace and modern distribution channels improves social welfare. In addition, a deregulation policy for firm entry outside a marketplace and accumulation of human capital are factors that contribute to improve the social welfare.