Behavioral characteristics of mrio-based global age models with variable elasticity of substitution between varieties

Kazuhiko Oyamada

No 881, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: This paper explores the indirect spillover effects of trade-related policies that affect welfare gains/losses via variety adjustments mentioned as by Fujita, Krugman, and Venables (2000), where access to a greater variety of intermediate commodities may reduce the costs of production using those intermediates. Using an applied g eneral equilibrium model that incorporate direct cross-border linkages between producers and importing agents, we examine what happens when the elasticity of substitution between varieties from different sources is endogenized. Experimental simulations using the model reveal that the efficiency-enhancing effects of smoother resource allocations (substitution) may work more effectively than the cost-reducing effects of variety a djustments suggested by Fujita et al. (2000). A production sector that exhibits increasing returns to scale under m onopolistic competition may serve as the main engine for accelerating the efficiency-enhancing effects to remarkable levels.

Keywords: variable; elasticity; of; substitution|firm; heterogeneity|monopolistic; competition|multi-regional; input-output|applied; general; equilibrium (search for similar items in EconPapers)
JEL-codes: C68 D58 F12 L11 (search for similar items in EconPapers)
Date: 2023-02
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in IDE Discussion Paper = IDE Discussion Paper, No. 881. 2023-02

Downloads: (external link)
https://ir.ide.go.jp/record/53640/files/IDP000881_001.pdf First version, 2023 (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:jet:dpaper:dpaper881

Ordering information: This working paper can be ordered from
Publication Office, IDE 3-2-2 Wakaba, Mihama-ku, Chiba-shi, Chiba 261-8545 JAPAN
http://www.ide.go.jp/English/Publish/Order

Access Statistics for this paper

More papers in IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO) Contact information at EDIRC.
Bibliographic data for series maintained by Michitaka Imamitsu ().