Together at Last: Trade Costs, Demand Structure, and Welfare | E-Axes
 

Search
Login
Username:
Password:
Not a member yet? Click here.
Forgot your Password?
Archives - Categories
Home
On Inequality
On the Eurozone Debt Crisis
On Monetary Policy and Central Banking
On Global Economic Growth
On the Greek Debt Crisis
On the Banking and Financial Sectors
On Brexit
On China
On India
On Global Inflation
On Currencies
On the US Debt
On the "Economics" of the Arab Spring
Blogs
Working Papers
Books
Books suggested by members



Together at Last: Trade Costs, Demand Structure, and Welfare

Abstarct

We show that relaxing the assumption of CES preferences in monopolistic competition has surprising implications when trade is restricted.  Integrated and segmented markets behave differently, the latter typically exhibiting reciprocal dumping.  Globalization and lower trade costs have different effects: the former reduces spending on all existing varieties, the latter switches spending from home to imported varieties; when demands are less convex than CES, globalization raises whereas lower trade costs reduce firm output.  Finally,calibrating gains from trade is harder.  Many more parameters are needed, while import demand elasticities typically overestimate the true elasticities, and so underestimate the gains from trade.

To download the PDF version of the working paper click here.


© 2011–2017 e-axes. All rights reserved. | Credits | Contact Us | Privacy Statement | Sat 20 Jan, 2018 01:36:32 AM
e-axes is proudly powered by Norder - Creative Solutions