Income Distribution and Trade Pattern

Sugata Marjit, Reza Oladi and Roychowdhury Punarjit ()
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Roychowdhury Punarjit: Business School, University of Nottingham, Nottingham, UK

Review of Economics, 2020, vol. 71, issue 1, 1-14

Abstract: Motivated by recent insights from behavioral economics and social psychology, we present a theory of trade that seeks to explain inter-industry trade between countries that are similar in their production sides, but differ in their income distribution. By assuming status-dependent preferences that are non-homothetic, we show that income inequality differential can be a basis for inter-industry trade between otherwise similar economies.

Keywords: inequality and trade; non-homothetic preferences; social status (search for similar items in EconPapers)
JEL-codes: F11 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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DOI: 10.1515/roe-2018-0029

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