Egger, Hartmut; Habermeyer, Simone - In: Review of World Economics 158 (2021) 3, pp. 815-853
-independent generalized-linear preferences over the two types of goods, covering homothetic and quasi-homothetic preferences as two limiting … cases. Due to the specific functional forms of indirect utility, homothetic preferences lead to risk aversion, while quasi …-homothetic preferences lead to risk neutrality in our model. We show that trade between two countries that differ in their population size …