Quantifying a vertical differentiation trade model

Evgenii Monastyrenko () and Pierre Picard
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Evgenii Monastyrenko: DEM, Université du Luxembourg

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: We build a trade model that simultaneously embeds vertical product differentiation, within- country heterogeneous income, heterogeneous goods, and many countries. Under some spec- ifications of costs and preferences, we can establish the existence of the general equilibrium and obtain a very tractable quantification model. We estimate all of the model parameters by applying the model properties on OECD countries. We finally quantify the effect of trade costs and economic shocks – like Brexit – on each country’s share of high-quality goods.

Keywords: vertical differentiation; general equilibrium; international trade. (search for similar items in EconPapers)
JEL-codes: F12 F16 L11 L15 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-ind and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:23-13

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