Trade Patterns and Welfare

By employing a model with international trade costs and imperfect competition, in which a domestic firm serves both the domestic market and the foreign market, we show that intraindustry trade compared to intersectoral trade is globally, but not mutually, welfare improving. When also foreign firms become active, competition strengthens but domestic welfare declines, because domestic consumers have to bear trade costs.

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Year of publication:	2005
Authors:	A. De Santis, Roberto ; Stähler, Frank
Published in:	Journal of Economic Integration. - Department of Economics and Trade. - Vol. 20.2005, p. 252-262
Publisher:	Department of Economics and Trade
Subject:	Trade \| Development \| Imperfect competition \| Welfare

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Type of publication:	Article
Classification:	F12 - Models of Trade with Imperfect Competition and Scale Economies ; F15 - Economic Integration
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10009390601