Variety, globalization, and social efficiency
W. Michael Cox and
Roy J. Ruffin
No 15, Globalization Institute Working Papers from Federal Reserve Bank of Dallas
Abstract:
This paper puts recent work on the benefits of variety into the context of a more complete quantitative analysis of the Dixit-Stiglitz-Krugman model of monopolistic competition. We show how the gains from globalization are reflected in the increase in variety and the exploitation of economies of scale, and that the social efficiency question is quantitatively insignificant. These results follow from examining a Bertrand-Nash equilibrium that allows for a finite number of varieties to affect the elasticity of demand facing each firm. We develop a precise expression for per capita real income with any number of sectors where globalization increases productivity through economies of scale.
JEL-codes: D60 F12 L11 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2008
Note: Published as: Cox, W. Michael and Roy J. Ruffin (2010), "Variety, Globalization, and Social Efficiency," Southern Economic Journal 76 (4): 1064-1075.
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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddgw:15
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