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Generalized separability and the gains from trade

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  • Fally, Thibault

Abstract

This note examines the gains from trade under a flexible demand system that encompasses three types of demand often imposed (cases of homothetic, directly-separable and indirectly-separable preferences), while retaining the property that prices can be summarized by a single aggregator. Combined with monopolistic competition and Pareto distributions of marginal costs on the supply side, this demand system yields more flexible responses of prices to income and trade, and a wider range of predictions for the gains from trade.

Suggested Citation

  • Fally, Thibault, 2019. "Generalized separability and the gains from trade," Economics Letters, Elsevier, vol. 178(C), pages 8-12.
    • Handle: RePEc:eee:ecolet:v:178:y:2019:i:c:p:8-12
    DOI: 10.1016/j.econlet.2019.02.005
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    Cited by:

    1. Martin Alfaro, 2022. "The microeconomics of new trade models," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(3), pages 1539-1565, August.
    2. Alfaro, Martin & Warzynski, Frederic, 2021. "Trade liberalization with granular firms," Economic Modelling, Elsevier, vol. 105(C).
    3. Badis Tabarki, 2020. "International Trade under Monopolistic Competition beyond the CES," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-02966937, HAL.
    4. Paolo Bertoletti & Federico Etro, 2024. "Insufficient Entry in Monopolistic Competition," Working Papers 543, University of Milano-Bicocca, Department of Economics.
    5. Badis Tabarki, 2020. "International Trade under Monopolistic Competition beyond the CES," Post-Print halshs-02966937, HAL.
    6. Badis Tabarki, 2020. "International Trade under Monopolistic Competition beyond the CES," Documents de travail du Centre d'Economie de la Sorbonne 20018, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    7. Yuichiro Matsumoto, 2019. "Firm Size Distribution and Variable Elasticity of Demand," Discussion Papers in Economics and Business 19-02, Osaka University, Graduate School of Economics.
    8. Fally, Thibault, 2022. "Generalized separability and integrability: Consumer demand with a price aggregator," Journal of Economic Theory, Elsevier, vol. 203(C).

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    More about this item

    Keywords

    Gains from trade; Gravity; Generalized separability; Single aggregator; Non-homothetic preferences;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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