EconPapers    
Economics at your fingertips  
 

A dynamic North-South model of demand-induced product cycles

Reto Foellmi (), Sandra Hanslin Grossmann () and Andreas Kohler

Journal of International Economics, 2018, vol. 110, issue C, 63-86

Abstract: This paper presents a dynamic North-South general-equilibrium model where per capita incomes shape demand patterns across regions. Innovation takes place in a rich North while firms in a poor South imitate products manufactured in North. Allowing a role for per capita incomes in determining demand delivers a complete international product cycle as described by Vernon (1966), where the different stages of the product cycle are not only determined by supply-side factors but also by the distribution of income between North and South. We analyze how changes in the gap between North and South due to changes in Southern labor productivity, population size in South and inequality across regions affect the international product cycle. In line with presented stylized facts, we predict a negative correlation between adoption time and per capita incomes.

Keywords: International product cycles; Inequality; International trade (search for similar items in EconPapers)
JEL-codes: F1 O3 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022199617301174
Full text for ScienceDirect subscribers only

Related works:
Working Paper: A Dynamic North-South Model of Demand-Induced Product Cycles (2015) Downloads
Working Paper: A dynamic North-South model of demand-induced product cycles (2015) Downloads
Working Paper: A Dynamic North-South Model of Demand-Induced Product Cycles (2015) Downloads
Working Paper: A Dynamic North-South Model of Demand-Induced Product Cycles (2015) Downloads
Working Paper: A Dynamic North-South Model of Demand-Induced Product Cycles (2012) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:110:y:2018:i:c:p:63-86

Access Statistics for this article

Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and Rodríguez-Clare, Andrés

More articles in Journal of International Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-11-09
Handle: RePEc:eee:inecon:v:110:y:2018:i:c:p:63-86