EconPapers    
Economics at your fingertips  
 

Relationship Specificity, Market Thickness, and International Trade

Tomohiro Ara and Taiji Furusawa ()

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: We develop a dynamic, search-theoretical, general-equilibrium model to investigate the effect of trade liberalization in vertically-related industries, emphasizing differential impacts depending on the degree of relationship specificity of components that are traded within the vertical relationships. The paper in particular unveils the role of search-and-matching and the resulting market structures of vertically-related industries in evaluating the impact of trade liberalization. We find that the higher the relationship specificity, the thinner is the components market; and that a reduction in trade costs, either in final-goods trade or in components trade, makes the components market thinner and enhances social welfare. We also examine how trade liberalization changes the trade volume of final goods and components, and whether they exhibit complementarity.

Pages: 35 pages
Date: 2017-08
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://www.rieti.go.jp/jp/publications/dp/17e105.pdf (application/pdf)

Related works:
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:eti:dpaper:17105

Access Statistics for this paper

More papers in Discussion papers from Research Institute of Economy, Trade and Industry (RIETI) Contact information at EDIRC.
Bibliographic data for series maintained by TANIMOTO, Toko ().

 
Page updated 2021-06-14
Handle: RePEc:eti:dpaper:17105