International Trade and Cultural Diversity: A Model of Preference Selection

Vankatesh Bala () and Ngo Van Long

No CESifo Working Paper No. 1242, CESifo Working Paper Series from CESifo Group Munich

Abstract: We consider the evolution of preferences when trade occurs between two countries. We show that if one country is much larger than the other, its preferences can eventually take over the preferences of the second country. This result may provide an explanation of why small countries sometimes exclude certain goods (especially those related to culture) from trade agreements. We also show that when the sensitivity of preferences to the relative price is high, the distribution of preferences can fluctuate cyclically over time.

Keywords: preferences; evolution; culture; replicator dynamics; international trade (search for similar items in EconPapers)
JEL-codes: D80 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-afr
Date: 2004
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