Increasing returns, monopolistic competition, and international trade: Revisiting gains from trade Full article
| Journal |
Journal of International Economics
ISSN: 0022-1996 |
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| Output data | Year: 2022, Volume: 137, Article number : 103595, Pages count : 22 DOI: 10.1016/j.jinteco.2022.103595 | ||||||||
| Tags | Autarky; Harmful trade; Monopolistic competition; Trade gains; Variable markups | ||||||||
| Authors |
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| Affiliations |
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Funding (3)
| 1 | Russian Foundation for Basic Research | 18-010-00728 |
| 2 | Russian Foundation for Basic Research | 19-010-00910 |
| 3 | Sobolev Institute of Mathematics | 0314-2019-0018 |
Abstract:
We study the canonical Krugman (1979) trade model with non-CES preferences that yield autarky at finite trade costs. We prove a non-monotone impact of gradual trade liberalization. At first, near autarky, emerging trade reduces world welfare, while at free trade it becomes large enough to be beneficial (Krugman's result). This non-monotonicity persists under heterogenous firms. The harmful small-scale trade is explained by variable markups and underpriced imports, which become socially excessive. Unlike protectionists, we argue that “liberalization should go far”. On the other hand, we show that anti-dumping measures can be viewed as a remedy for the aforementioned imports distortion.
Cite:
Kokovin S.
, Molchanov P.
, Bykadorov I.
Increasing returns, monopolistic competition, and international trade: Revisiting gains from trade
Journal of International Economics. 2022. V.137. 103595 :1-22. DOI: 10.1016/j.jinteco.2022.103595 WOS Scopus РИНЦ OpenAlex
Increasing returns, monopolistic competition, and international trade: Revisiting gains from trade
Journal of International Economics. 2022. V.137. 103595 :1-22. DOI: 10.1016/j.jinteco.2022.103595 WOS Scopus РИНЦ OpenAlex
Dates:
| Submitted: | May 8, 2020 |
| Accepted: | Feb 10, 2022 |
| Published online: | Feb 15, 2022 |
| Published print: | Jul 8, 2022 |
Identifiers:
| Web of science: | WOS:000820161400012 |
| Scopus: | 2-s2.0-85125490632 |
| Elibrary: | 48186815 |
| OpenAlex: | W4213311891 |