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Monopolistic Competition and North-South Trade

Reza Oladi () and John Gilbert ()

No 2011-01, Working Papers from Utah State University, Department of Economics

Abstract: We examine the consequences of opening to international trade for a developing economy with open urban unemployment and rural-urban migration, where the urban sector is monopolistically competitive. We show that there exists a threshold level of urbanization prior to which increases in product variety will be reflected in increased urban unemployment, that opening to intra-industry trade with a high-wage economy (i.e., North-South trade) will reduce the rate of urban unemployment by a greater amount than intra-industry trade with a similar economy, and that trade intervention in the South may lower welfare by reducing varieties produced in the North.

Keywords: Trade and monopolistic competition; Urban unemployment; North-South trade (search for similar items in EconPapers)
JEL-codes: F12 F13 F16 O18 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2011-01-20
New Economics Papers: this item is included in nep-int
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Related works:
Journal Article: Monopolistic Competition and North–South Trade (2011)
Working Paper: Monopolistic Competition and North-South Trade (2011) Downloads
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