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Trade and Communication Costs

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Author Info
Richard G. Harris
Abstract

Two models in which communication costs are a cost to trade are investigated. One model looks at the role of communication in determining the firms' geographic extent in the use of local factor services. Communication costs are modelled as a quasi-public-good network in which communication services are provided by an average cost-pricing monopolist. The network technology is subject to increasing returns, congestion effects, and network externalities. The second model focuses on communication for the purposes of international trade in goods with similar assumptions on the technology of communication as in the first model. In this model an important distinction is made between international equilibrium and global equilibrium. In both models the impact of reductions in communication costs on the market extent of firms, trade volumes, and productivity are examined. The models have generic multiple equilibria with quite different welfare and comparative static properties.

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Publisher Info
Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 28 (1995)
Issue (Month): s1 (November)
Pages: 46-75
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Handle: RePEc:cje:issued:v:28:y:1995:i:s1:p:46-75

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  2. Colin Davis, 2005. "Capital-Intensive Country-Specific Network Costs and Intra-Industry Trade," Economics Bulletin, Economics Bulletin, vol. 6(3), pages 1-9. [Downloadable!]
  3. Wilhelm Kohler, 2003. "Factor Price Frontiers with International Fragmentation of Multistage Production," Economics working papers 2003-05, Department of Economics, Johannes Kepler University Linz, Austria. [Downloadable!]
  4. Fink, Carsten & Mattoo, Aaditya & Neagu, Ileana Cristina, 2002. "Assessing the impact of communication costs on international trade," Policy Research Working Paper Series 2929, The World Bank. [Downloadable!]
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  5. Michael C. Burda & Barbara Dluhosch, 2000. "Fragmentation, Globalization and Labor Markets," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  6. Matsuoka, Yuji & Fukushima, Marcelo, 2009. "Time Zones, Shift Working and International Outsourcing," MPRA Paper 13355, University Library of Munich, Germany, revised Jul 2009. [Downloadable!]
  7. J. Peter Neary, 2000. "Of Hype and Hyperbolas - Introducing the new Economic Geography," Working Papers 200019, School Of Economics, University College Dublin. [Downloadable!]
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  8. Wilhelm Kohler, 2002. "Aspects of International Fragmentation," Economics working papers 2002-08, Department of Economics, Johannes Kepler University Linz, Austria. [Downloadable!]
  9. Colin Davis, 2007. "Communication costs, network externalities, and long-run growth," Economics Bulletin, Economics Bulletin, vol. 15(5), pages 1-9. [Downloadable!]
  10. Barbara Dluhosch & Michael Burda, 2000. "Cost Competition, Fragmentation and Globalization," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  11. Fukushima, Marcelo & Kikuchi, Toru, 2008. "Competing Communications Networks and International Trade," MPRA Paper 7815, University Library of Munich, Germany. [Downloadable!]
  12. Barry, Frank, 2002. "FDI, Infrastructure and the Welfare Effects of Labour Migration," CEPR Discussion Papers 3380, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  13. Xinyi Li, 2009. "Free trade agreements and vertical-specialisation in East Asia," Asia Europe Journal, Springer, vol. 7(1), pages 145-160, February. [Downloadable!] (restricted)
  14. Ronald W. Jones, 2000. "A Framework for Fragmentation," Tinbergen Institute Discussion Papers 00-056/2, Tinbergen Institute. [Downloadable!]
  15. Frédéric Robert-Nicoud, 2006. "Off-Shoring of Business Services and De-Industrialization: Threat or Opportunity - and for Whom?," CEP Discussion Papers dp0734, Centre for Economic Performance, LSE. [Downloadable!]
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  16. Okamoto, Yusuke, 2006. "Integration versus Outsourcing in Stable Industry Equilibrium with Communication Networks," IDE Discussion Papers 54, Institute of Developing Economies, Japan External Trade Organization(JETRO). [Downloadable!]
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