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Income Distribution and Trade Pattern

Author

Listed:
  • Marjit Sugata

    (Indian Institute of Foreign Trade, Kolkata, India)

  • Oladi Reza

    (Department of Applied Economics, Utah State University, 4835 Old Main Hill, Logan, Utah, USA)

  • Roychowdhury Punarjit

    (Business School, University of Nottingham, Nottingham, UK)

Abstract

Motivated by recent insights from behavioral economics and social psychology, we present a theory of trade that seeks to explain inter-industry trade between countries that are similar in their production sides, but differ in their income distribution. By assuming status-dependent preferences that are non-homothetic, we show that income inequality differential can be a basis for inter-industry trade between otherwise similar economies.

Suggested Citation

  • Marjit Sugata & Oladi Reza & Roychowdhury Punarjit, 2020. "Income Distribution and Trade Pattern," Review of Economics, De Gruyter, vol. 71(1), pages 1-14, April.
    • Handle: RePEc:lus:reveco:v:71:y:2020:i:1:p:1-14:n:1
    DOI: 10.1515/roe-2018-0029
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    References listed on IDEAS

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    Cited by:

    1. Hamid Beladi & Sugata Marjit & Koushik Kumar Hati, 2024. "Growth impact of status seeking behavior: A counter example," Economics and Politics, Wiley Blackwell, vol. 36(1), pages 398-406, March.
    2. Hamid Beladi & Sugata Marjit & Reza Oladi & Lei Yang, 2021. "Malnutrition in the shadow of economic growth," Review of Development Economics, Wiley Blackwell, vol. 25(1), pages 500-514, February.

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    More about this item

    Keywords

    inequality and trade; non-homothetic preferences; social status;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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