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Technological Progress, Terms of Trade, and Monopolistic Competition

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  • Chul Chung

Abstract

This paper examines welfare implications of technological progress in the new trade model with monopolistic competition. Our result shows that labor-augmenting technological progress turns the terms of trade against the growing country while capital-augmenting technological progress shifts them in favor of the growing country. Unlike the Findlay-Grubert theorem, both technological progresses are welfare-enhancing. The key channel for this welfare effect is the love of variety in the new trade model.

Suggested Citation

  • Chul Chung, 2007. "Technological Progress, Terms of Trade, and Monopolistic Competition," International Economic Journal, Taylor & Francis Journals, vol. 21(1), pages 61-70.
    • Handle: RePEc:taf:intecj:v:21:y:2007:i:1:p:61-70
    DOI: 10.1080/10168730601180887
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    References listed on IDEAS

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    1. Flam, Harry & Helpman, Elhanan, 1987. "Industrial policy under monopolistic competition," Journal of International Economics, Elsevier, vol. 22(1-2), pages 79-102, February.
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    3. Kim, Young-Han, 2005. "The optimal path of regional economic integration between asymmetric countries in the North East Asia," Journal of Policy Modeling, Elsevier, vol. 27(6), pages 673-687, September.
    4. Colin Lawrence & Pablo T. Spiller, 1983. "Product Diversity, Economies of Scale, and International Trade," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(1), pages 63-83.
    5. Jitendralal Borkakoti, 1980. "Generalized Findlay-Grubert Theorem," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(4), pages 587-611.
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    Cited by:

    1. Kwok Tong Soo, 2016. "Intra-industry trade: A Krugman–Ricardo Model and Data," Economica, London School of Economics and Political Science, vol. 83(330), pages 338-355, April.
    2. Bernhard G. Gunter & Valeria Vargas Sejas, 2017. "Free Falling Terms of Trade Despite Industrialization: The Case of Bangladesh," Bangladesh Development Research Working Paper Series (BDRWPS) BDRWPS No. 33, Bangladesh Development Research Center (BDRC).
    3. Kwok Tong Soo, 2013. "Intra-industry trade," Working Papers 33867578, Lancaster University Management School, Economics Department.
    4. Wen-Xi Ruan & Xin Yu & Sheng-Yuan Wang & Tian-Cheng Zhao & Ya-Zhen Liu, 2022. "Exploration of China–ASEAN Trade Relations in the Context of Sustainable Economic Development—Based on the Lotka–Volterra Model," Sustainability, MDPI, vol. 15(1), pages 1-22, December.
    5. Kwok Tong Soo, 2018. "Multinationals do not export jobs, and other related results," Working Papers 244952396, Lancaster University Management School, Economics Department.

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