The network origins of the gains from trade
Maarten Bosker () and
No 13285, CEPR Discussion Papers from C.E.P.R. Discussion Papers
This paper argues that the determinants of the welfare gains from trade have fundamentally changed with the emergence of a global production network. Towards this end, we study a Ricardian trade model featuring trade in intermediate inputs, and develop a novel comparative statics approach to decompose the total welfare effect of an arbitrary trade cost shock into several meaningful, easily quantifiable, channels. This decomposition uncovers a unique feature of supply chain trade: the gains from trade are not so much determined by a country's access to the technologies and markets of its direct trade partners, but rather by a country's network exposure to countries further up- or downstream in the global production network. We develop a set of simple statistics to measure each country's network exposure, show how it predicts the gains from trade, and identify each country's key trade intermediaries, i.e., countries that primarily determine its network exposure.
Keywords: Gains from trade; global production network; network diffusion; network exposure; Supply Chains; trade intermediation (search for similar items in EconPapers)
JEL-codes: F10 F11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int and nep-net
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)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at email@example.com
Working Paper: The network origins of the gains from trade (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:13285
Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... rs/dp.php?dpno=13285
Access Statistics for this paper
More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().