Heterogeneity, Networks and International Trade under Monopolistic Competition

Hiep Nguyen and Hiroshi Ohta

No 1, GSICS Working Paper Series from Graduate School of International Cooperation Studies, Kobe University

Abstract: This paper examines integrated effects of firm heterogeneity and communication network services on international trade. Patterns and effects of trade are to be analyzed in a general equilibrium model where firms with different productivity levels share among them the cost of network services and compete in a monopolistically competitive market for a differentiated good. The paper reveals that the more efficient country in the differentiated good production is not always the net-exporter of the good. The less efficient country also has the chance to expand the industry and then to become the net-exporter in this intra-industry trade due to the combination of the efficiency effect induced by firm heterogeneity and the cost-sharing effect by the existence of the network service industry.

Keywords: international trade; communication networks; monopolistic competition; firm heterogeneity; efficiency gaps (search for similar items in EconPapers)
Pages: 30 pages
Date: 2005-07
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Citations: View citations in EconPapers (1)

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