Trade Patterns and Welfare

Roberto A. De Santis () and Frank Stähler
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Roberto A. De Santis: European Central Bank, Postal: Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany

Journal of Economic Integration, 2005, vol. 20, 252-262

Abstract:

By employing a model with international trade costs and imperfect competition, in which a domestic firm serves both the domestic market and the foreign market, we show that intraindustry trade compared to intersectoral trade is globally, but not mutually, welfare improving. When also foreign firms become active, competition strengthens but domestic welfare declines, because domestic consumers have to bear trade costs.

Keywords: Trade; Development; Imperfect competition; Welfare (search for similar items in EconPapers)
JEL-codes: F12 F15 (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0314

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