Does trade in differentiated goods raise wages?

Gian Maria Tomat

Structural Change and Economic Dynamics, 2020, vol. 53, issue C, 344-352

Abstract: We present a modified Heckscher–Ohlin model featuring product differentiation and monopolistic competition. Consumer preferences take the constant elasticity of substitution form. Production technology has constant returns to scale. The analysis shows, that in the movement from autarky to free trade the change in the wage/rental ratio following from an increase in the number of differentiated product varieties is due to the pattern of relative substitutability between the differentiated and the homogeneous good.

Keywords: International trade; Product differentiation; Monopolistic competition; Factor price equalization (search for similar items in EconPapers)
JEL-codes: E24 F12 F16 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:53:y:2020:i:c:p:344-352

DOI: 10.1016/j.strueco.2019.05.008

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