Arnaud Costinot

Costinot is best known for his 2012 paper “New Trade Models, Same Old Gains?” with Costas Arkolakis and Andres Rodriguez-Clare, which has proven enormously influential in trade theory.Arkolakis, Costas, Arnaud Costinot, and Andrés Rodríguez-Clare. 2012. "New Trade Models, Same Old Gains?" American Economic Review 102 (1): 94–130.

DOI: 10.1257/aer.102.1.94

The increasing availability of firm-level microdata has allowed economists to be much more specific in their predictions about trade. Firms are heterogenous, and vary widely in their production functions. The Melitz model of trade, and its later extension with Gianmarco Ottoviano, predicts that when the cost of exporting falls, the more efficient firms are the ones who take advantage of it. They benefit more from the expansion in market size than they are hurt by the increase in competition.Melitz, Marc J., and Daniel Trefler. 2012. "Gains from Trade When Firms Matter." Journal of Economic Perspectives 26 (2): 91–118.

DOI: 10.1257/jep.26.2.91

Arkolakis, Costinot, and Rodriguez-Clare are able to show that, for a large class of trade models including Eaton and Kortum (2002),Eaton, J., & Kortum, S. (2002). Technology, Geography, and Trade. Econometrica, 70(5), 1741–1779. http://www.jstor.org/stable/3082019 Krugman (1980),Krugman, P. (1980). Scale Economies, Product Differentiation, and the Pattern of Trade. The American Economic Review, 70(5), 950–959. http://www.jstor.org/stable/1805774 and many variations of Melitz (2003),Melitz, M.J. (2003), The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity. Econometrica, 71: 1695-1725. https://doi.org/10.1111/1468-0262.00467 the gains from trade depend only on the share of expenditure on domestic goods, and the elasticity of imports with respect to trade costs. Plugging in estimates for those two parameters gives a range of the gains from trade between .7 and 1.4 percent. With the Melitz model, these results hold so long as there is a Pareto distribution of firm productivity.Melitz, Marc J., and Stephen J. Redding. 2015. "New Trade Models, New Welfare Implications." American Economic Review 105 (3): 1105–46.

DOI: 10.1257/aer.20130351

Arkolakis, Costinot, and Rodriguez-Clare, now with Dave Donaldson, extend their work to analyze the gains from trade when markups are variable, in "The Elusive Pro-Competitive Effects of Trade". The gains from a country opening up their markets to trade may increase competition, and reduce the markups of domestic firms. On the other hand, foreign firms might be able to increase their markups. When we drop the assumption of CES utility (which necessitates constant markups), the welfare impact can by summarized by a constant multiplied by the welfare impact of trade under CES utility. Plugging in parameter estimates shows that opening trade need not improve allocation. The positive change to domestic firms is offset by the negative change to foreign firms.Costas Arkolakis, Arnaud Costinot, Dave Donaldson, Andrés Rodríguez-Clare, The Elusive Pro-Competitive Effects of Trade, The Review of Economic Studies, Volume 86, Issue 1, January 2019, Pages 46–80, https://doi.org/10.1093/restud/rdx075Acemoglu, Daron. 2018. "Dave Donaldson: Winner of the 2017 Clark Medal." Journal of Economic Perspectives 32 (2): 193–208.

DOI: 10.1257/jep.32.2.193

Costinot, with Donaldson, looked at the effects of the economic integration of the United States on agriculture more generally, using a dataset of the potential productivity of every section of land for every crop in the United States. This allows them to estimate the optimal combination of crops if there were no trade barriers, and calculate how far away from optimal trade barriers push us. They find that up to 80% of the economic growth of agriculture between 1880 and 1997 is due to trade.{{cite news | url=https://www.economist.com/finance-and-economics/2017/04/20/a-trade-economist-wins-the-john-bates-clark-medal | title=A trade economist wins the John Bates Clark medal | newspaper=The Economist }} Costinot and Donaldson, with Cory Smith, scale this up to the entire globe and apply it to climate change. Allowing production patterns to adjust would substantially mitigate damages to crops, with international trade having only a limited role. Evolving Comparative Advantage and the Impact of Climate Change in Agricultural Markets: Evidence from 1.7 Million Fields around the World

Arnaud Costinot, Dave Donaldson, and Cory Smith

Journal of Political Economy 2016 124:1, 205-248{{cite web|url=https://www.weforum.org/stories/2015/11/can-trade-compensate-for-farms-lost-to-climate-change/|title=Can trade compensate for farms lost to climate change?}}{{cite web|url=https://www.princeton.edu/~ies/Fall12/DonaldsonPaper1.pdf|title=Evolving Comparative Advantage and the Impact of Climate Change in Agricultural Markets: Evidence from a 9 Million-Field Partition of the Earth}} Costinot and Donaldson also use this dataset to test whether Ricardian comparative advantage explains the pattern of agricultural trade around the world, finding strong evidence that it does.Costinot, Arnaud, and Dave Donaldson. 2012. "Ricardo's Theory of Comparative Advantage: Old Idea, New Evidence." American Economic Review 102 (3): 453–58. DOI: 10.1257/aer.102.3.453{{cite web|url=https://economics.mit.edu/sites/default/files/publications/PP-1-31-12.pdf|title=Ricardo's Theory of Comparative Advantage: Old Idea, New Evidence|author=ARNAUD COSTINOT and DAVE DONALDSON}}

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Category:American people of French descent

Category:French economists

Category:American economists

Category:Massachusetts Institute of Technology faculty

Category:University of California, San Diego faculty

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Category:1978 births

Category:Living people