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Structural Estimation of Variety Gains from Trade Integration in Asia

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  • d’Artis Kancs

    (European Commission †Joint Research Centre (IPTS))

Abstract

Structural Estimation of Variety Gains from Trade Integration in Asia Abstract: The present paper studies variety gains from trade integration in Asia. Applying a heterogenous Örm model we simulate trade integration in Asia in three different scenarios (CIFTA, ASEAN+3, and ASEAN+6). The paper makes three contributions to the literature. First, in addition to traditional gains from specialisation, we also account for gains arising from increased number of different varieties. Second, we explicitly account for di§erences in trade gains between variable and fixed trade cost reduction. Third, using a unique set of firm-level panel data we estimate the underlying trade modelís structural parameters econometrically. We find that the gains from trade integration are substantial. Reducing trade barriers by 15 percent induces trade growth up to 60 percent, which due to the additional extensive margin is more than in trade models with representative firms. Similarly, due due additional welfare gains from variety growth, the gains from trade are up to 17 percent higher than in models with homogenous products.

Suggested Citation

  • d’Artis Kancs, 2009. "Structural Estimation of Variety Gains from Trade Integration in Asia," Working Papers 2009.7, International Network for Economic Research - INFER.
    • Handle: RePEc:inf:wpaper:2009.7
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    Cited by:

    1. Victor Rivas, 2012. "Structural Estimation of Variety Gains from Trade Integration in a Heterogeneous Firms Framework," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 55(2), pages 78-93.
    2. D’Artis Kancs, 2010. "Structural Estimation of Variety Gains from Trade Integration in Asia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(3), pages 270-288, September.
    3. Sascha Kraus & Christine Mitter & Felix Eggers & Philipp Stieg, 2017. "Drivers of internationalization success: a conjoint choice experiment on German SME managers," Review of Managerial Science, Springer, vol. 11(3), pages 691-716, July.
    4. Bouët, Antoine & Estrades, Carmen & Laborde, David, 2011. "Households heterogeneity in a global CGE model: an illustration with the MIRAGE poverty module," Conference papers 332034, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. James Anderson, 2001. "Migration, FDI, and the Margins of Trade," EERI Research Paper Series EERI_RP_2001_05, Economics and Econometrics Research Institute (EERI), Brussels.
    6. Zeynep Akgul & Nelson B Villoria & Thomas W Hertel, 2016. "GTAP-HET: Introducing Firm Heterogeneity into the GTAP Model," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 1(1), pages 111-180, June.
    7. Ahmad, Saad & Akgul, Zeynep, 2018. "Using Power Laws to Identify the Structural Parameters of Trade Models with Firm Heterogeneity," Conference papers 332993, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    8. Movahedi, Mohammad, 2013. "Le commerce international, l’adoption de l’innovation et le choix de l’entrée-sortie à l’exportation des firmes [International trade, innovation adoption and export entry-exit choice of the firms]," MPRA Paper 44268, University Library of Munich, Germany, revised 01 Jan 2014.
    9. Kancs, d'Artis & Persyn, Damiaan, 2019. "Welfare Gains from the Variety Growth," Conference papers 333020, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    10. Tsitsi Effie Mutambara, 2024. "South Africa-Africa trade: Continental Free Trade Area," EERI Research Paper Series EERI RP 2024/02, Economics and Econometrics Research Institute (EERI), Brussels.

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    More about this item

    Keywords

    Variety gains; extensive margin; trade integration; Asia; heterogenous firms.;
    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
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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