Marjit, Sugata and Mandal, Biswajit (2009): General Trading Costs in Pure Theory of International Trade.
Download (169kB) | Preview
We use the HOS model of international trade to find a link between trading (including domestic trading or retailing) costs and pattern of trade, not just its effect on volume of trade. Even if we use symmetric iceberg type trading costs, unlike conventional unit cost approach, we generate relative price effects and prove that higher trading costs in labor-abundant countries will restrict volume of world trade by working against factor endowment bias and conversely for the capital-abundant nation if the trading sector is labor intensive and vice versa. Asymmetric trading cost between goods may have paradoxical output effects. Relatively capital-abundant country will be worse off with increasing trading cost, whereas once engaged in trade the labor-abundant country may gain from further increase in trading cost.
|Item Type:||MPRA Paper|
|Original Title:||General Trading Costs in Pure Theory of International Trade|
|English Title:||General Trading Costs in Pure Theory of International Trade|
|Keywords:||International Trade; Factor-intensity; General equilibrium.|
|Subjects:||D - Microeconomics > D5 - General Equilibrium and Disequilibrium
F - International Economics > F1 - Trade
|Depositing User:||Biswajit Mandal|
|Date Deposited:||16. Dec 2009 05:43|
|Last Modified:||19. Feb 2013 00:04|
Anderson, J., “Why do nations trade (so little)?”. Pacific Economic Review, 5(2)(2000):115-134.
Anderson, J, and E. Wincoop., “Trade Costs”. Journal of Economic Literature, 42(3)(2004):691-751.
Bandopadhyay, S, and S. Roy., “Corruption and Trade Protection: Evidence from Panel Data” Working paper 2007-022A, (2007): Federal reserve bank of St. Louis.
Bernard, A. B., J. B. Jensen and P. K. Schott., “Trade Costs, Firms and Productivity”, Journal of Monetary Economics, 53(5) (2006) : 917-937.
Bhagwati, J., “Directly Unproductive Profit Seeking (DUP) Activities”. Journal of Political Economy, 90(5) (1982): 988-1002.
Cassing, J.H., “Transport Costs in International Trade Theory: A comparison with the Analysis of Non-traded Goods”, Quarterly Journal of Economics, XCII(4) (1978): 535- 550.
Chakrabarti, A., “Asymmetric Adjustment Costs in Simple General Equilibrium Models”, European Economic Review, 48 (2004): 63-73.
Davis, D., “The Home Market Effect, Trade and Industrial Structure”,American Economic Review, 88 (1998), 1264-1276.
Deardorff, A. V., “Local Comparative Advantage: Trade Costs and the Pattern of Trade”,DP No. 500 (2004): University of Michigan.
Falvey, R.E., “Transport Costs in the Pure Theory of International Trade”. The Economic Journal, 86(343) (1976 ): 536-550.
Fink, C., A. Mattoo and I. C. Neagn. “Assessing the impact of communication costs on international trade”, Journal of International Economics, 67(2) (2005): 428-445.
Gruen, F. and W. M. Corden., “A Tariff that Worsens the Terms of Trade”, in I.A.MacDougall and R.H.Snapes (eds.) Studies in International Economics, Amsterdam,North-Holland (1970).
Jones, R.W.,“The Structure of Simple General Equilibrium Models.” Journal of Political Economy, 73(5) (1965):57-572.
Jones, R.W. and S. Marjit., “International Trade and Endogenous Production Structures”,W. Neuefeind and R. Riezman (eds.), Economic Theory and InternationalTrade: Essays in Memoriam J.Trout Rader. 95-107, Springer-Verlag, NewYork, USA, (1992).
Kikuchi, T., “Time Zones, Outsourcing and International Trade”, Economics Bulletin,6(15) 92006.): 1-10.
Laussel, D., R, Riezman., “Fixed Transport Costs and International Trade”, in S. Marjit and E. Yu (eds.), Cotemporary and Emerging Issues in Trade Theory and Policy, Elsevier (2008).
Limao, N. and A. Venables., “Infrasructure, Geographical Disadvantage, Transports Costs and Trade”, World Bank Economic Review, 15(3) (2001): 451-479.
Marjit, S., “Trade Theory and Role of Time zones”, International review of Economics and Finance”, 16 (2007.): 153-160.
Marjit, S and H. Beladi., “Complementarity between Import Competion and Import Promotion”, Journal of Economic Theory, 86(2) (1999): 280-285.
Trefler, D., “The Case of Missing Trade and Other Mysteries.” American Economic Review, 85 (1995): 1029-1046.