International Trade under Monopolistic Competition beyond the CES

Badis Tabarki ()
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Badis Tabarki: Centre d'Economie de la Sorbonne, Université Paris 1 Panthéon-Sorbonne and Paris School of Economics, https://centredeconomiesorbonne.cnrs.fr

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: This paper considers a general yet tractable demand system encompassing directly- and indirectly-separable preferences, with homothetic CES as a commonn ground. An added flexibility of this demand system is that it allows for two alternative curvatures of demand. Beyond the CES, demand may be either "sub-convex": less convex than the CES, or "super-convex": more convex than the CES. Embedded in a general equilibrium trade model featuring standard assumptions on the supply side, this flexible demand system yields new comparative statics results and a wide range of predictions for the gains from trade, while illustrating existing ones in a simple and compact way. The main finding of this paper is that while demand curvature governs comparative statics results and plays a crucial role in determining the structure and the magnitude of welfare gains from trade, the type of preferences has only a second-order importance from a welfare standpoint

Keywords: gains from trade; heterogeneous firm; non-CES preferences; demand curvature (search for similar items in EconPapers)
JEL-codes: D11 F12 L11 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2020-08
New Economics Papers: this item is included in nep-int
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http://mse.univ-paris1.fr/pub/mse/CES2020/20018.pdf (application/pdf)
https://halshs.archives-ouvertes.fr/halshs-02966937

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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:20018

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