 International Trade and Cultural IdentityNo 10426, NBER Working Papers from National Bureau of Economic Research, Inc Abstract: Economists emphasize the benefits from free trade due to international specialization, but typically have a narrow measure of what matters to individuals. Critics of free trade, by contrast, focus on the pattern of consumption in society and the nature of goods being consumed, but often fail to take into account the gains from specialization. This paper develops a new framework to study the effects of trade liberalization on cultural identity, which emerges as the result of the interaction of individual consumption choices, similar to a network externality. In a Ricardian model of international trade the paper shows that (i) trade is not Pareto inferior to autarky if the free trade equilibrium is unique, (ii) trade is not Pareto superior to autarky if the world is culturally diverse under free trade, but can be if the world is culturally homogenous, (iii) and when multiple free trade equilibria exist everybody in a country can lose from free trade if that country is culturally homogenous under autarky. Consumers of imported cultural goods tend to gain, while consumers of exported cultural goods tend to lose from trade liberalization. JEL-codes: F02 F13 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:10426 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC. |
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