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The Heckscher–Ohlin model with monopolistic competition and general preferences

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  • Etro, Federico

Abstract

I extend the neoclassical 2×2×2 trade model to general preferences over a variety of goods supplied under monopolistic competition in a sector while the other sector is perfectly competitive. Non-homothetic preferences deliver pricing to market, incomplete pass-through and market size effects. Under realistic conditions, the differentiated goods are sold at a higher price in the capital-abundant country.

Suggested Citation

  • Etro, Federico, 2017. "The Heckscher–Ohlin model with monopolistic competition and general preferences," Economics Letters, Elsevier, vol. 158(C), pages 26-29.
    • Handle: RePEc:eee:ecolet:v:158:y:2017:i:c:p:26-29
    DOI: 10.1016/j.econlet.2017.06.021
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    Cited by:

    1. Etro, Federico, 2019. "The Romer model with monopolistic competition and general technologies," Economics Letters, Elsevier, vol. 181(C), pages 1-6.
    2. Sugata Marjit & Biswajit Mandal, 2021. "Monopolistic Competition, Optimum Product Diversity, and International Trade - The Role of Factor Endowment and Factor Intensities," CESifo Working Paper Series 9256, CESifo.
    3. Lilia Cavallari & Federico Etro, 2017. "Demand, Markups and the Business Cycle. Bayesian Estimation and Quantitative Analysis in Closed and Open Economies," Working Papers 2017:09, Department of Economics, University of Venice "Ca' Foscari".

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    More about this item

    Keywords

    Monopolistic competition; Heckscher–Ohlin model; Non-homothetic preferences; International trade;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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