Abstract
In this paper we present a monopolistic competition model that incorporates asymmetric trade barriers and international differences in production costs. The model implies a highly non-linear bilateral trade equation. Estimation of this equation yields parameters for the elasticity of substitution and trade costs that are more reasonable than those found in previous studies. A simulation indicates that trade liberalization will shift trade from rich countries to poor countries and from within continental trading partners with preferential trade agreements to intercontinental trading partners.
Original language | English |
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Pages (from-to) | 459-483 |
Number of pages | 25 |
Journal | Canadian Journal of Economics |
Volume | 37 |
Issue number | 2 |
DOIs | |
Publication status | Published - 1 May 2004 |
Externally published | Yes |
ASJC Scopus subject areas
- Economics and Econometrics