Trade and Trade Policy with Differentiated Products: A Chamberlinian-Ricardian Model / Svetlana Demidova, Kala Krishna.

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Demidova, Svetlana

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w12949.Publication details: Cambridge, Mass. National Bureau of Economic Research 2007.Description: 1 online resource: illustrations (black and white)Subject(s):

F1 - Trade

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Abstract: This paper shows that the results of Venables (1987) depend critically on the assumption that there are no fixed costs of trade. The introduction of fixed costs of exporting, while making the model more consistent with the empirical evidence, leads to the opposite conclusion that technological progress in one country cannot harm the welfare of its trading partner. However, the results can be obtained in a richer setting with heterogeneous firms.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w12949 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w12946 The Welfare State and the Forces of Globalization /	nber w12947 International Evidence on Fiscal Solvency: Is Fiscal Policy "Responsible"? /	nber w12948 Beliefs, Doubts and Learning: Valuing Economic Risk /	nber w12949 Trade and Trade Policy with Differentiated Products: A Chamberlinian-Ricardian Model /	nber w1295 Some Pleasant Monetarist Arithmetic /	nber w12950 Firm Heterogeneity and Firm Behavior with Conditional Policies /	nber w12951 Worker Sorting, Compensating Differentials and Health Insurance: Evidence from Displaced Workers /	Next

March 2007.

This paper shows that the results of Venables (1987) depend critically on the assumption that there are no fixed costs of trade. The introduction of fixed costs of exporting, while making the model more consistent with the empirical evidence, leads to the opposite conclusion that technological progress in one country cannot harm the welfare of its trading partner. However, the results can be obtained in a richer setting with heterogeneous firms.