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Interconnectivity of communications networks and international trade

Author

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  • Toru Kikuchi

Abstract

In this study a multi‐country model of trade is developed that captures the role of country‐specific communications network interconnectivity, which enhances trade in intermediate business services. The number of countries connected to internationally interconnected networks is found to determine the structure of comparative advantage. That is, countries with interconnected networks have a comparative advantage in the good that requires business services provided via networks. In connected countries, producers of that good benefit from the efficient transmission of business services. This research also demonstrates that countries whose country‐specific networks are not connected to the interconnected networks may become worse off as the result of trade. JEL Classification: D43, F12 Interconnectivité des réseaux de communication et commerce international Ce mémoire développe un modèle de commerce international impliquant plusieurs pays qui cerne le rôle de l’interconnectivité des réseaux de communication de chaque pays. Cette interconnectivité enrichit les flux de commerce dans les services intermédiaires d’affaires. Il appert que le nombre de pays connectés aux réseaux internationalement connectés détermine la structure de l’avantage comparatif. Ce qui veut dire que les pays qui ont des réseaux interconnectés ont un avantage comparatif dans le bien qui requiert les services d’affaires fournis par les réseaux. Dans les pays connectés, les producteurs de ces biens bénéficient de la transmission efficace de ces services d’affaires. La recherche montre aussi que les pays dont les réseaux nationaux ne sont pas connectés aux réseaux interconnectés peuvent voir leur situation s’empirer en conséquence du commerce international.

Suggested Citation

  • Toru Kikuchi, 2003. "Interconnectivity of communications networks and international trade," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 36(1), pages 155-167, March.
  • Handle: RePEc:wly:canjec:v:36:y:2003:i:1:p:155-167
    DOI: 10.1111/1540-5982.00008
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    References listed on IDEAS

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    1. Markusen, James R, 1989. "Trade in Producer Services and in Other Specialized Intermediate Inputs," American Economic Review, American Economic Association, vol. 79(1), pages 85-95, March.
    2. Toru Kikuchi & Tetsuro Ichikawa, 2002. "Congestible communications networks and international trade," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 35(2), pages 331-340, May.
    3. Matsuyama, Kiminori, 1996. "Why Are There Rich and Poor Countries? Symmetry-Breaking in the World Economy," Journal of the Japanese and International Economies, Elsevier, vol. 10(4), pages 419-439, December.
    4. Richard G. Harris, 1995. "Trade and Communication Costs," Canadian Journal of Economics, Canadian Economics Association, vol. 28(s1), pages 46-75, November.
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    Cited by:

    1. repec:ebl:ecbull:v:6:y:2006:i:15:p:1-10 is not listed on IDEAS
    2. Toru Kikuchi, 2007. "Network Externalities And Comparative Advantage," Bulletin of Economic Research, Wiley Blackwell, vol. 59(4), pages 327-337, October.
    3. Nguyen HIEP & Hiroshi OHTA, 2005. "Heterogeneity, Networks and International Trade under Monopolistic Competition," GSICS Working Paper Series 1, Graduate School of International Cooperation Studies, Kobe University.
    4. Jeon, Bang Nam & Tang, Linghui, 2005. "Information Technology and Bilateral FDI: Theory and Evidence," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 20, pages 613-630.
    5. Kenji Fujiwara, 2011. "Network externalities, transport costs, and tariffs," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 20(6), pages 729-739, October.
    6. Toru Kikuchi, 2005. "Interconnected communications networks and home market effects," Canadian Journal of Economics, Canadian Economics Association, vol. 38(3), pages 870-882, August.
    7. repec:ebl:ecbull:v:6:y:2005:i:7:p:1-9 is not listed on IDEAS
    8. Kikuchi, Toru, 2005. "On the enlargement of interconnected communications networks in the world economy," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(1), pages 18-27, February.
    9. Kikuchi, Toru & Long, Ngo Van, 2010. "A simple model of service offshoring with time zone differences," The North American Journal of Economics and Finance, Elsevier, vol. 21(3), pages 217-227, December.
    10. Jorge Ferrando & Jean J. Gabszewicz & Didier Laussel & Nathalie Sonnac, 2008. "Intermarket network externalities and competition: An application to the media industry," International Journal of Economic Theory, The International Society for Economic Theory, vol. 4(3), pages 357-379, September.
    11. repec:ebl:ecbull:v:6:y:2007:i:4:p:1-7 is not listed on IDEAS
    12. Iwasa, Kazumichi & Kikuchi, Toru, 2008. "Software Provision and the Impact of Market Integration: A Note," MPRA Paper 9315, University Library of Munich, Germany.
    13. Toru Kikuchi, 2006. "Time Zones, Outsourcing and Patterns of International Trade," Economics Bulletin, AccessEcon, vol. 6(15), pages 1-10.

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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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