Productivity, Quality And Exporting Behavior Under Minimum Quality Constraints

The authors develop a model of international trade with two sources of firm heterogeneity: "Productivity" and "Caliber". Productivity is modeled as is standard in the literature. Caliber is the ability to produce quality using few fixed inputs. While there is no quality restriction to sell domestically, exporting requires the attainment of minimum quality levels. Compared to single-attribute models of firm heterogeneity emphasizing either productivity or the ability to produce quality, the model provides a more nuanced characterization of firms' export behavior.