Decomposing the Welfare Gains from Trade

Paolo Bertoletti (paolo.bertoletti@unimib.it) and Federico Etro (federico.etro@unifi.it)

Working Papers - Economics from Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa

Abstract: The textbook of international economics by Krugman, Obstfeld and Melitz (2022) introduces the gains from trade under monopolistic competition with a simple linear demand model. We use its representative consumer foundation to decompose the welfare gains from a market expansion into competitive effects, variety effects and selection effects.

Keywords: Gains from trade; Monopolistic competition; Heterogeneous firms (search for similar items in EconPapers)
JEL-codes: D11 D43 F12 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2024
New Economics Papers: this item is included in nep-int
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Journal Article: Decomposing the welfare gains from trade (2025)
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