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Standardization of intermediate goods and international trade

Oliver Lorz () and Matthias Wrede ()

Canadian Journal of Economics, 2008, vol. 41, issue 2, 517-536

Abstract: This paper analyzes the relationship between standardization of intermediate inputs and international trade. We employ a two-country, general equilibrium model with differentiated manufacturing goods. Production of manufacturing goods requires specific intermediate inputs, which can be either specialized or standardized. Standardization and the pattern of trade are determined endogenously in our model. In this framework we derive the effects of trade integration, that is, a decline in trading costs for intermediate goods, on the equilibrium outcome.

JEL-codes: F12 L11 (search for similar items in EconPapers)
Date: 2008
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Handle: RePEc:cje:issued:v:41:y:2008:i:2:p:517-536