Firm heterogeneity and firm behavior with conditional policies

This paper shows that the result of Ju and Krishna [Ju, J., Krishna, K., 2002. Regulations, Regime Switches and Non-Monotonicity when Non-Compliance is an Option: An Application to Content Protection and Preference. Economic Letters 77, 315–321, Ju, J., Krishna, K., 2005. Firm Behavior and Market Access in a Free Trade Area with Rules of Origin. Canadian Journal of Economics 38 (1), 290–308], i.e., the non-monotonicity in the comparative statics across regimes, disappears, if exporters differ in their productivities, which provides very different predictions about the results of policy changes.