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Variety Gains from Trade in Switzerland

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  • Lukas Mohler

Abstract

Since the seminal work of Krugman (1979), variety gains from trade are recognized as an important channel of welfare gains. In this paper, the gains from variety are estimated for Switzerland. It is found that despite the openness of the Swiss economy these gains are not substantial and smaller than in other countries; specifically compared to the gains in the United States. It is shown that the reasons for this result are twofold: First, the Swiss imports are shown not to be as differentiated as their U.S. counterparts; consequently, new varieties do not provide the same value to consumers. Second, variety growth of imports in Switzerland is much smaller compared to variety growth in larger countries. It is furthermore shown that this latter effect is quantitatively more important than the first.

Suggested Citation

  • Lukas Mohler, 2011. "Variety Gains from Trade in Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 147(I), pages 45-70, March.
    • Handle: RePEc:ses:arsjes:2011-i-3
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    References listed on IDEAS

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    Cited by:

    1. Moncarz Pedro Esteban, 2023. "Impactos de bienestar de los aranceles y las licencias no automáticas a las importaciones. Evidencia para Argentina durante el período 2002-2012," Asociación Argentina de Economía Política: Working Papers 4671, Asociación Argentina de Economía Política.
    2. Christian Hepenstrick, 2016. "The Sources and Magnitudes of Switzerland’s Gains from Trade," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 152(1), pages 1-21, January.
    3. Christian Hepenstrick, 2016. "Switzerland's gains from trade with Europe:," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 67(03), pages 25-42, December.
    4. Philipp Imhof, 2021. "Switzerland's system of free trade agreements: Assessing the impact on imported goods," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 71(01), pages 35-72, December.
    5. Luis Marcelo Florensa & Pedro Esteban Moncarz, 2020. "Trade integration strategies and welfare. A comparative study of six selected Latin-American countries," Asociación Argentina de Economía Política: Working Papers 4377, Asociación Argentina de Economía Política.
    6. Ulf Lewrick & Lukas Mohler & Rolf Weder, 2016. "Trade in variety and domestic production: Evidence from US manufacturing," Canadian Journal of Economics, Canadian Economics Association, vol. 49(4), pages 1631-1657, November.
    7. Lewrick, Ulf & Mohler, Lukas & Weder, Rolf, 2011. "International Trade in Variety and Domestic Production," Working papers 2011/03, Faculty of Business and Economics - University of Basel.
    8. João Barata R. B. Barroso, 2013. "Does trade shrink the measure of domestic firms?," Working Papers Series 332, Central Bank of Brazil, Research Department.

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    More about this item

    Keywords

    welfare gains from trade; trade in variety; small open economy;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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