Trade Patterns And Export Pricing Under Non-Ces Preferences

Sergey Kichko, Sergey Kokovin and Evgeny Zhelobodko

HSE Working papers from National Research University Higher School of Economics

Abstract: We develop a two-factor, two-sector trade model of monopolistic competition with variable elasticity of substitution. Firms' profits and sizes may increase or decrease with market integration depending on the degree of asymmetry between countries. The country in which capital is relatively abundant is a net exporter of the manufactured good, although both firm sizes and profits are lower in this country than in the country where capital is relatively scarce. The pricing policy adopted by firms neither depends on capital endowment nor country asymmetry. It is determined by the nature of preferences: when demand elasticity increases (decreases) with consumption, firms practice dumping (reverse-dumping)

Keywords: international trade; monopolistic competition; capital asymmetry; variable markups (search for similar items in EconPapers)
JEL-codes: F12 F13 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2014
New Economics Papers: this item is included in nep-ger and nep-int
References: View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Published in WP BRP Series: Economics / EC, March 2014, pages 1-45

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Related works:
Journal Article: Trade patterns and export pricing under non-CES preferences (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hig:wpaper:54/ec/2014

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