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Congestible communications networks and international trade

Author

Listed:
  • Toru Kikuchi
  • Tetsuro Ichikawa

Abstract

We build a two-country model of monopolistic competition with communications networks. A communications network is characterized by (1) the existence of large fixed costs of network provision, and (2) the presence of congestion. It is demonstrated that both the size of a country and the relative magnitude of the congestion effect determine its comparative advantage: if the congestion effect (resp., the cost-sharing effect) prevails universally, a comparative advantage in the goods that require communications is held by the smaller (resp., larger) of the two countries.
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Suggested Citation

  • Toru Kikuchi & Tetsuro Ichikawa, 2002. "Congestible communications networks and international trade," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 8(1), pages 81-81, February.
    • Handle: RePEc:kap:iaecre:v:8:y:2002:i:1:p:81-81:10.1007/bf02295569
    DOI: 10.1007/BF02295569
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    Citations

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    Cited by:

    1. Ashok S. Guha & Brishti Guha, 2009. "Trade, Growth, and Increasing Returns to Infrastructure: The Role of the Sophisticated Monopolist," Review of International Economics, Wiley Blackwell, vol. 17(5), pages 1053-1065, November.
    2. repec:ebl:ecbull:v:6:y:2005:i:3:p:1-9 is not listed on IDEAS
    3. Toru Kikuchi & Chiharu Kobayashi, 2003. "Communications networks and virtual economic integration: The case of three countries," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 9(1), pages 1-6, February.
    4. Toru Kikuchi, 2003. "Interconnectivity of communications networks and international trade," Canadian Journal of Economics, Canadian Economics Association, vol. 36(1), pages 155-167, February.
    5. 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.
    6. 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.
    7. 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.
    8. repec:ebl:ecbull:v:15:y:2007:i:5:p:1-9 is not listed on IDEAS
    9. Colin Davis, 2005. "Capital-Intensive Country-Specific Network Costs and Intra-Industry Trade," Economics Bulletin, AccessEcon, vol. 6(3), pages 1-9.
    10. Colin Davis, 2007. "Communication costs, network externalities, and long-run growth," Economics Bulletin, AccessEcon, vol. 15(5), pages 1-9.
    11. Nguyen Hiep & Hiroshi Ohta, 2007. "Efficiency in International Trade with Firm Heterogeneity and Networks," Review of Development Economics, Wiley Blackwell, vol. 11(2), pages 217-231, May.

    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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