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Trade in variety and domestic production: Evidence from US manufacturing

Author

Listed:
  • Ulf Lewrick
  • Lukas Mohler
  • Rolf Weder

Abstract

Welfare gains from increasing product variety are an important source of the gains from international trade. Previous empirical studies, however, typically focus on measuring gains from imported varieties. This paper introduces a measure to analyze changes in domestically produced varieties to estimate the total variety gains. Our analysis suggests that, for US manufacturing, losses in domestic varieties from 1992 to 2006 seem substantial given the large decline in the number of US establishments. Yet, once we account for the reallocation of resources towards large multi‐variety firms, we find considerable domestic variety gains, adding to those from imported varieties. Commerce dans une production domestique variée : résultats pour le secteur manufacturier aux États‐Unis. Le gains de bien‐être émergeant d'une variété croissante de produits sont une source importante de gains dans le commerce international. Les études empiriques antérieures ont cependant typiquement mis l'accent sur la mesure des gains découlant de la variété dans les importations. Ce mémoire propose une mesure pour analyser les changements dans la variété des produits domestiques pour mesurer les gains attribuables à la variété. L'analyse des auteurs suggère que, pour le secteur manufacturier aux États‐Unis, les pertes dans les variétés domestiques de 1992 à 2006 semblent substantielles compte tenu du déclin dans le nombre d'établissements. Or une fois prise en compte la réallocation des ressources vers de grandes entreprises à productions multi‐variées, on découvre l'existence gains de variété considérables s'ajoutant à ceux en provenance des variétés importées.

Suggested Citation

  • Ulf Lewrick & Lukas Mohler & Rolf Weder, 2016. "Trade in variety and domestic production: Evidence from US manufacturing," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(4), pages 1631-1657, November.
    • Handle: RePEc:wly:canjec:v:49:y:2016:i:4:p:1631-1657
    DOI: 10.1111/caje.12246
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    Cited by:

    1. Kancs, d'Artis & Persyn, Damiaan, 2019. "Welfare Gains from the Variety Growth," JRC Working Papers in Economics and Finance 2019-01, Joint Research Centre, European Commission.

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