International trade, migration and investment with horizontal product differentiation and free entry and exit of firms
AbstractThis paper builds a circular road model of the world with horizontal product differentiation and free entry and exit of firms, to show that freer international trade increases welfare –with ideal variety preferences– through the exploitation of economies of scale and better allocative efficiency, that all participating countries gain from trade, and that smaller countries have more to win from free trade than larger countries. Political resistance to trade liberalization, international migration and foreign direct investment are also analyzed with the model. Finally, the model provides a microfoundation for the use of demand curves with constant and negative slopes.
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Bibliographic InfoArticle provided by UNIVERSIDAD DEL ROSARIO in its journal REVISTA DE ECONOMÍA DEL ROSARIO.
Volume (Year): (2006)
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Other versions of this item:
- Hernán Vallejo G, 2005. "International Trade, Migration And Investment With Horizontal Product Differentiation And Free Entry And Exit Of Firms," DOCUMENTOS CEDE 002917, UNIVERSIDAD DE LOS ANDES-CEDE.
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CORE Discussion Papers
1997082, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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