Distribution Costs and International Trade: A Ricardian Model

Usree Bandyopadhyay

Review of International Economics, 1998, vol. 6, issue 1, 164-78

Abstract: This paper studies the role of the distribution sector in determining a country's pattern and terms of trade. The effect of an improvement in distribution technology is analyzing using a Ricardian trade modal with a endogenous distribution sector. The results are found to depend on the magnitude of distribution costs relative to manufacturing costs and preference for distribution services in the trading countries. This has important implication for the Structural Impediments Initiative, which maintains that a more efficient distribution sector in Japan would benefit both the USA and Japan. Copyright 1998 by Blackwell Publishing Ltd.

Date: 1998
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