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Capital-Intensive Country-Specific Network Costs and Intra-Industry Trade

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Author Info
Colin Davis () (Graduate School of Economics and Business Administration, Hokkaido University)

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Abstract

This paper examines the impacts of country-specific network costs that are provided by a capital-intensive communications sector in a two-country two-factor model, where there are two trading sectors, agriculture and manufacturing. It is shown that when firms in the manufacturing sector incur a fixed cost associated with connection to the communications network upon entry, comparative advantage will be determined by the relative endowments of capital in each country and the size of fixed costs associated with the communications sector. The capital abundant (scarce) country will have a comparative advantage (disadvantage) when the cost-sharing effect (the congestion effect) dominates.

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File URL: http://www.economicsbulletin.com/2005/volume6/EB-05F10002A.pdf
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Publisher Info
Article provided by Economics Bulletin in its journal Economics Bulletin.

Volume (Year): 6 (2005)
Issue (Month): 3 ()
Pages: 1-9
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ebl:ecbull:v:6:y:2005:i:3:p:1-9

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Related research
Keywords: Communications Networks; Congestion; Cost-Sharing; Intra-Industry Trade; Monopolistic Competition;

Find related papers by JEL classification:
F1 - International Economics - - Trade
D4 - Microeconomics - - Market Structure and Pricing

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Richard G. Harris, 1995. "Trade and Communication Costs," Canadian Journal of Economics, Canadian Economics Association, vol. 28(s1), pages 46-75, November.
  2. Edward N. Wolff, 1999. "The productivity paradox: evidence from indirect indicators of service sector productivity growth," Canadian Journal of Economics, Canadian Economics Association, vol. 32(2), pages 281-308, April. [Downloadable!] (restricted)
    Other versions:
  3. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June. [Downloadable!] (restricted)
    Other versions:
  4. Toru Kikuchi & Tetsuro Ichikawa, 2002. "Congestible communications networks and international trade," Canadian Journal of Economics, Canadian Economics Association, vol. 35(2), pages 331-340, May. [Downloadable!] (restricted)
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This page was last updated on 2009-12-12.

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