Neckties in the Tropics: A Model of International Trade and Cultural Diversity

Vitor Trindade (trindadev@missouri.edu) and James Rauch

No 517, Working Papers from Department of Economics, University of Missouri

Abstract: Some cultural goods, like clothes and films, are consumed socially and are thus characterized by the same consumption network externalities as languages. At the sametime, producers of new cultural goods in any one country draw on the stock of ideasgenerated by previous cultural production in all countries. For such goods, costless tradeand communication tend to lead to the dominance of one cultural style, increasing utilityin the short run but reducing quality and generating cultural stagnation in the long run.Increasing trade costs while keeping communication costs low may reduce welfare bystimulating production of cultural goods that are compatible with the dominant style,thereby capturing consumption network externalities, but that add little to the stock ofusable ideas. Our two-country analysis suggests a reform of cultural policy wherebyimport restrictions in the smaller country are removed, and are replaced by subsidies tothe fixed costs of production of new cultural goods in its traditional style.

Keywords: consumption network externalities; home market effect; globalization; cultural policy (search for similar items in EconPapers)
JEL-codes: F12 F13 F15 Z10 (search for similar items in EconPapers)
Pages: 46 pgs.
Date: 2005-11-30
New Economics Papers: this item is included in nep-cul, nep-int and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Neckties in the tropics: a model of international trade and cultural diversity (2009)
Journal Article: Neckties in the tropics: a model of international trade and cultural diversity (2009)
Working Paper: Neckties in the Tropics: A Model of International Trade and Cultural Diversity (2005)
Working Paper: Neckties in the Tropics: a Model of International Trade and Cultural Diversity (2004)
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