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Trade Patterns and Welfare

Author

Listed:
  • A. De Santis, Roberto

    (European Central Bank)

  • Stähler, Frank

    (University of Otago)

Abstract

By employing a model with international trade costs and imperfect competition, in which a domestic firm serves both the domestic market and the foreign market, we show that intraindustry trade compared to intersectoral trade is globally, but not mutually, welfare improving. When also foreign firms become active, competition strengthens but domestic welfare declines, because domestic consumers have to bear trade costs.

Suggested Citation

  • A. De Santis, Roberto & Stähler, Frank, 2005. "Trade Patterns and Welfare," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 20, pages 252-262.
    • Handle: RePEc:ris:integr:0314
    as

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    More about this item

    Keywords

    Trade; Development; Imperfect competition; Welfare;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration

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